New Reforms launched for Urban Cooperative Banks

The Union Home Minister, Sh. Amit Shah has announced new reforms for Urban Cooperative Banks. Some of the most important points are as follows:

• The ‘Sahkar Nav-Kranti’ programme was held in Mumbai to make Urban Cooperative Banks (UCBs) more modern, transparent, secure and competitive.
• The Umbrella Organisation for Urban Cooperative Banks has received RBI recognition, adequate capital and a new office. India’s umbrella organisation for urban cooperative banks is the National Urban Cooperative Finance and Development Corporation (NUCFDC).
• ₹306 crore capital was mobilised for the Umbrella Organisation in a short period.
• The organisation will help UCBs with RBI compliance, technical support, regulatory updates, software and employee training.
• ‘Bank in a Box’ has been launched. It will provide core banking, digital payments, cloud services, regulatory compliance and other modern banking facilities on one platform.
• A Security Operations Centre (SOC) has been launched for UCBs. It will provide 24×7 cyber monitoring, security support and immediate guidance.
• An MoU was signed between NUCFDC and National Forensic Sciences University (NFSU) to strengthen cybersecurity and digital forensics for UCBs.
• Around ₹6 lakh crore is deposited in about 1,400 Urban Cooperative Banks across India.
• UCBs provide small loans to small traders, shopkeepers, MSMEs, local entrepreneurs, women’s SHGs and the middle class.
• Maharashtra has the highest number of UCBs — 449. Maharashtra, Gujarat, Goa and Karnataka together account for a major share of UCBs.
• The headquarters of NUCFDC will be shifted from Delhi to Maharashtra.

Important Reforms for UCBs

• UCBs can open up to 15% additional branches without separate RBI permission.
• Doorstep banking facilities have been allowed for UCBs.
• The process for eligible Tier-3 UCBs to obtain scheduled bank status has been simplified.
• RBI has appointed a nodal officer for regular dialogue with the UCB sector.
• Priority Sector Lending (PSL) target for UCBs has been reduced from 75% to 60%.
• Housing-loan limits for UCBs have been increased.
• One-Time Settlement (OTS) facility has been extended to UCBs.
• UCBs, State Cooperative Banks and District Cooperative Banks have been given Member Lending Institution status, enabling risk coverage up to 85% and collateral-free loans.
• The PSL limit for cooperative societies has been increased from ₹5 lakh to ₹10 crore.

Membership of Umbrella Organisation

• There are around 1,400 UCBs in India.
• Currently, around 650 UCBs have become members of the Umbrella Organisation — nearly 50%.
• The target is to bring 100% of UCBs into the Umbrella Organisation’s network within the next one year.

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