Urban Cooperative Banks: RBI Plans Paper on New Licences
Why in the news
RBI plans a discussion paper on opening the door to fresh urban cooperative bank licences, reversing a long-standing stance.
Key facts
- The 2004 freeze came from weak finances and governance in the sector.
- Rethink reason: better financial results and compliance among current UCBs.
- Between 2004 and 2024, mergers, closures and the licence freeze cut UCBs from 1,926 to 1,472 (March 2024).
About UCBs
Cooperative banks in urban and semi-urban areas serving small borrowers, traders and low- and middle-income groups, offering deposits, loans and remittances.
| Law | Covers |
|---|---|
| Banking Regulation Act, 1949 (applied since 1966) | RBI oversight of deposits, lending, capital adequacy, prudential norms |
| State Cooperative Societies Act | Governance, elections, audit at state level |
| Multi-State Cooperative Societies Act, 2002 | UCBs in more than one state; Central Registrar |
Exam angle
- Licence freeze year: 2004; UCB count: 1,926 to 1,472.