UCBs asked to join NUCFDC for tech support, RBI is proactive towards sector: Amit Shah

Days after the Reserve Bank of India (RBI) decided to resume issuing licenses to urban cooperative banks (UCBs), Union Cooperation Minister Amit Shah on Saturday asked the UCBs to join the umbrella body of National Urban Cooperative Finance and Development Corporation Limited (NUCFDC) for technological support and increasing the confidence of depositors.

Announcing that NUCFDC will soon be shifted to Maharashtra from New Delhi, Shah, who is also the Home Minister, asked the UCBs to look at RBI from a different viewpoint as it has proactively helped the sector in recent times.

“Drawing on my experience, I can say the RBI has always proactively helped us whenever we look forward to them. RBI and UCBs have different standpoints, from which we have to come out,” said Mr. Shah, while speaking at the ‘Sahakar Nav-Kranti Melava’ programme, where he inaugurated a new office building of the NUCFDC in Mumbai.

He highlighted that the RBI has recently liberalised branch opening, raised limits on gold loans along with a one-time settlement option for the UCBs, allowed the UCBs to provide doorstep banking, demand drafts and life certificates facilities, and appointed a dedicated nodal officer for affairs of the UCBs.

RBI Governor Sanjay Malhotra announced its decision to resume licensing of UCBs, after a pause of more than two decades, as part of developing a vibrant co-operative sector.

RBI, which came out with a four-tier regulatory structure for UCBs in 2022, has now mooted an on-tap framework with significantly higher entry thresholds, including substantial minimum capital and business scale needs.

Terming small borrowers as the safest category for lenders, he said, “The scheme of offering ₹2.5 lakh of loans without any collateral was provided during my time at a UCB in Gujarat. The management had doubts, but the repayment rate including interest is over 99% under the scheme. So, it is safest for lenders to loan to small borrowers”.

NUCFDC headquarters

According to Mr. Shah, India is home to 1,400 UCBs with deposits of about ₹6 lakh crores. Maharashtra houses 449 cooperative banks, a major contributor to the cooperative banking sector in the country.

He announced that NUCFDC will soon be shifted to Maharashtra from New Delhi as 70% of the entities are from Maharashtra, Gujarat, Goa and Karnataka.

Urging UCBs to join the umbrella body, Mr Shah said, “It will link to the Security Operation Centre, increasing the confidence of depositors in banks and providing information about the latest reforms being made in the banking sector, necessary software facilities like Mule Hunter, and training programmes for employees.”