RBI initiate measures to strengthen Financial Health, Governance and Digital Inclusion of Cooperative Bank

New Delh: In consultation with the Government of India, the Reserve Bank of India (RBI) has initiated measures that loans sanctioned by Banks to National Cooperative Development Corporation (NCDC) with effect from 19th January 2026 for on-lending to cooperative societies would now be eligible for classification as priority sector lending under the respective categories. These measures would not include Regional Rural Banks, Urban Cooperative Banks, Small Finance Banks and Local Area Banks. These loans are mentioned under the purpose for Master Direction on Priority Sector Lending, 2025. The Government of India and RBI have come with several measures to foster cooperative banks’ financial health, governance, and digital inclusion along with deposit security enhancement, credit availability, and prudent regulation:

1-Urban Cooperative Banks (UCBs) have been allowed to open new branches

2-Housing loan limits have been increased from 10% to 25% of their total loans and advances for UCBs

3-The Banking Regulation Act has been amended to increase the terms of directors of Cooperative Banks from 8 to 10 years

4-Licensing fee for onboarding of cooperative banks to Aadhar enabled Payment System (AePS) have been reduced

5-The National Urban Co-operative Finance and Development Corporation Limited (NUCFDC), which is a non-deposit taking Non-Banking Financial Company (NBFC), has been set up as an Umbrella Organization for Urban Cooperative Banks to provide Information Technology (IT) infrastructure and operational support

6-A Shared Services Entity (SSE), Sahakar Sarthi, has been established to provide technological services to Rural Cooperative Banks

7-Rural Cooperative Banks have been included by RBI in the Integrated Ombudsman Scheme

8-Deposit Insurance and Credit Guarantee Corporation (DICGC) insures various types of deposits up to Rs 5,00,000 per depositor per bank (including principal and interest) for all cooperative banks

National Cooperative Development Corporation (NCDC) is a statutory corporation under the administrative control of the Ministry of Cooperation which provides financial assistance to Cooperatives and contributes directly in accelerating the growth of cooperative movement