Reacting to the Union Budget 2026–27, Karnataka cooperator Rudregowda Patil said Urban Cooperative Banks (UCBs) are deeply disappointed, citing continued neglect of the sector and the imposition of fresh regulatory and operational pressures without corresponding policy support.
He said the Budget has failed to create a level playing field for UCBs compared to Commercial Banks and Small Finance Banks, despite repeated assurances under the “Sahkar se Samriddhi” vision. He cautioned that rising compliance costs and the absence of targeted incentives could force several small, community-based banks into involuntary mergers.
Highlighting key concerns, Rudregowda said there was no progress on income-tax parity, with corporate tax slabs remaining unchanged, hampering internal capital formation. He added that the Budget’s push for advanced digital infrastructure and enhanced cybersecurity, without a dedicated Cooperative Technology Fund or subsidies, would significantly increase operational expenditure for smaller UCBs.
The sector also flagged the unchanged ?5 lakh deposit insurance limit amid inflation, exclusion of UCBs from interest subvention schemes for MSMEs and housing, and the absence of a clear roadmap to resolve the long-standing dual control issue involving the RBI and State Registrars.
He warned that these gaps could weaken grassroots urban banking institutions.
