Context
After a gap of nearly 20 years, RBI has proposed reopening licences for Urban Co-operative Banks (UCBs) to strengthen the sector, with preference for large, financially sound co-operative credit societies due to governance failures in small UCBs.
Key Changes Proposed by RBI
• Licences to be favoured for large co-operative credit societies, not small ones
Stricter eligibility norms
• Minimum CRAR: 12%
• Net NPA ≤ 3%
Longer track record required
• At least 10 years of active operations
• Minimum 5 years of sound financial performance
Focus on governance quality
• Better board expertise
• Stronger management practices
