- The government has launched a range of initiatives aimed at bolstering the structure and operations of cooperative banks, bringing them up to speed with commercial banks, as Union Home and Cooperation Minister Amit Shah shared with the Lok Sabha on Tuesday.
- In his written response, Shah explained that these efforts are being supported by the Department of Financial Services (DFS) and the Reserve Bank of India (RBI) to boost business opportunities, enhance governance, increase credit flow, and modernize banking services within the cooperative sector.
- He mentioned that Urban Cooperative Banks (UCBs) are now allowed to open new branches and have been given extra time to meet their Priority Sector Lending (PSL) targets.
- UCBs can also offer doorstep banking services and settle outstanding loans in a one-time arrangement, much like commercial banks do.
- To improve lending capabilities, the RBI has significantly raised the individual housing loan limits for both Rural Cooperative Banks (RCBs) and UCBs.
The government has launched a range of initiatives aimed at bolstering the structure and operations of cooperative banks, bringing them up to speed with commercial banks, as Union Home and Cooperation Minister Amit Shah shared with the Lok Sabha on Tuesday.
In his written response, Shah explained that these efforts are being supported by the Department of Financial Services (DFS) and the Reserve Bank of India (RBI) to boost business opportunities, enhance governance, increase credit flow, and modernize banking services within the cooperative sector.
He mentioned that Urban Cooperative Banks (UCBs) are now allowed to open new branches and have been given extra time to meet their Priority Sector Lending (PSL) targets. UCBs can also offer doorstep banking services and settle outstanding loans in a one-time arrangement, much like commercial banks do.
To improve lending capabilities, the RBI has significantly raised the individual housing loan limits for both Rural Cooperative Banks (RCBs) and UCBs. Additionally, RCBs are now permitted to lend to the commercial real estate and residential housing sectors. Cooperative banks have also been included as Member Lending Institutions (MLIs) under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
The Minister pointed out that the RBI has relaxed several regulatory requirements, such as lowering the PSL targets for UCBs from 75% to 60%, easing restrictions on weaker-section sub-limits, and eliminating the Rs 2 lakh lending target for women borrowers. Furthermore, the RBI has doubled the gold loan ceiling under the bullet repayment scheme from Rs 2 lakh to Rs 4 lakh for eligible UCBs.
Emphasizing the importance of digital and technological advancements, Shah highlighted that the license fee for onboarding cooperative banks to the Aadhaar Enabled Payment System (AePS) has been reduced based on transaction volume. The RBI has also established scheduling norms for UCBs, and cooperative banks are now included under the RBI Ombudsman Scheme, which enhances customer grievance resolution.