NUCFDC Seeks RBI Nod for Digital Services in Small UCBs
Why in the news
The apex body of urban co-operative banks, NUCFDC, is preparing a request to RBI for relaxed digital-service norms for smaller UCBs that cannot meet the net worth benchmark.
Key facts
- Existing rule: digital services only for UCBs with net worth above ₹50 crore.
- More than 50% of the 1,462 UCBs miss this level.
- UCBs collectively hold about ₹5.5 trillion in deposits.
- Proposal: allow digital banking if banks join a centralised, secure, standard technology platform, since shared infrastructure lowers cyber risk.
| NUCFDC detail | Information |
|---|---|
| Licence | February 2024, mid-layer NBFC |
| Focus | Non-fund-based support, especially digital modernisation |
| Partner UCBs | 440 |
| Stack contents | Hardware and applications, banking platforms, cybersecurity, central manpower and maintenance |
Significance and RBI’s task
- Without digital tools, UCBs struggle to compete with scheduled commercial and small finance banks.
- RBI must test the idea against cybersecurity, operational resilience, consumer protection and risk norms for thinly capitalised banks.
About UCBs
- Co-operative banks serving urban and semi-urban areas, owned by members on a one member, one vote basis.
- Dual regulation: RBI handles banking functions; the State Government or Central Registrar handles management.
- Types: Scheduled UCBs (in the Second Schedule) and Non-Scheduled UCBs.
Exam angle
- Apex body: NUCFDC; net worth threshold: ₹50 crore.
- Voting principle in UCBs: one member, one vote.
- Regulator for banking functions: RBI.