Senior cooperative banking sector leader and President of the National Urban Cooperative Finance and Development Corporation (NUCFDC), Jyotindra Mehta, has articulated strong expectations from the Union Budget 2026–27, calling for targeted measures to reinforce confidence in the urban cooperative banking system.
The Budget, scheduled to be presented on February 1, 2026, by Union Finance Minister Nirmala Sitharaman, is being keenly watched by stakeholders in the cooperative banking space, particularly in the context of depositor protection, regulatory ease and taxation reforms.
Speaking to Indian Cooperative, Mehta said the urban cooperative banking sector is hopeful that the forthcoming Budget will address several long-pending and critical demands. Foremost among these is the provision of 100 percent Deposit Insurance and Credit Guarantee Corporation coverage for deposits held by senior citizens.
He pointed out that elderly depositors form a substantial and vulnerable segment of the customer base of urban cooperative banks and often rely on interest income from deposits for their day-to-day expenses and healthcare needs. Full insurance cover for senior citizens’ deposits, he said, would provide much-needed financial security and peace of mind.
Mehta stressed that such a move would go a long way in enhancing confidence among elderly depositors and would also strengthen overall trust in the cooperative banking system. At a time when financial awareness among depositors is increasing, he noted, stronger insurance protection would reinforce the credibility of cooperative banks and help them retain and attract stable deposits.
Beyond depositor insurance, Mehta called for extending the government’s Ease of Doing Business framework to the cooperative banking sector, particularly urban cooperative banks. He observed that despite playing an important role in financial inclusion and catering to small businesses, traders and the middle class, UCBs continue to face procedural and regulatory challenges that affect their operational efficiency. Simplification of compliance requirements and greater administrative clarity, he said, would enable cooperative banks to function more smoothly and improve service delivery to customers.
He also highlighted the need for better policy-level coordination between different authorities. While the Reserve Bank of India functions under the Ministry of Finance, Mehta noted that closer coordination is essential to resolve regulatory bottlenecks and ensure that policy decisions are aligned with the ground realities faced by cooperative banks. Streamlined regulatory processes would help the sector focus more on growth, governance and customer service rather than procedural hurdles.
Taxation emerged as another major concern raised by the NUCFDC President. Mehta urged the government to provide relief to urban cooperative banks under Section 80P of the Income Tax Act, 1961, which has remained a long-standing and contentious issue.
He said that as changes are being introduced through Finance Bills and amendments to tax laws, the Budget presents an opportunity to resolve this issue in a fair and balanced manner. Restoring clarity and relief under Section 80P, he argued, would significantly improve the financial viability of cooperative banks.
Mehta concluded by emphasising that meaningful policy support in the Union Budget 2026–27 would greatly strengthen the cooperative banking sector and help align it with the government’s broader economic reforms agenda, ensuring that cooperative institutions continue to serve communities in an efficient, transparent and sustainable manner.
