The Reserve Bank of India’s (RBI) draft guidelines on ‘on-tap’ licensing of Urban Co-operative Banks (UCBs) have set a high eligibility threshold, leaving only three cooperative institutions in the country that currently satisfy the key deposit criterion.
According to an analysis by Indian Cooperative, Buldana Urban Co-operative Credit Society, Lokmanya Multipurpose Co-operative Society, and Repco Bank (Repatriates Cooperative Finance and Development Bank Ltd.) are the only cooperative institutions with deposits exceeding the RBI’s prescribed threshold of Rs 10,000 crore.
While Buldana Urban and Lokmanya are prominent credit cooperative societies registered under the Multi-State Cooperative Societies Act, 2002, Repco Bank, headquartered in Tamil Nadu, was established on November 19, 1969, and is also registered under the Multi-State Cooperative Societies Act. It, too, meets the deposit eligibility criterion laid down in the draft guidelines.
Besides the deposit requirement, applicants must have a minimum net worth of Rs 300 crore, maintain a Capital to Risk-weighted Assets Ratio (CRAR) of at least 12%, keep Net NPAs below 3%, and demonstrate a sound financial and operational track record over the previous five years.
The draft framework also prescribes stringent governance standards, including a 5% cap on individual shareholding, compliance with the RBI’s ‘fit and proper’ criteria for directors, and adherence to all applicable regulatory and supervisory requirements.
However, the RBI has clarified that merely fulfilling the eligibility conditions will not guarantee a banking licence. Applications will be evaluated on a case-by-case basis, and licences will be granted only after comprehensive regulatory scrutiny and due diligence.
If the draft guidelines are notified in their present form, Buldana Urban Co-operative Credit Society, Lokmanya Multipurpose Co-operative Society, and Repco Bank are expected to emerge as the leading contenders for conversion into Urban Co-operative Banks, subject to satisfying all prudential, governance, and licensing requirements prescribed by the RBI.
