In a written reply to the Lok Sabha, Union Home and Cooperation Minister Amit Shah stated that District Central Cooperative Banks (DCCBs) will now be allowed to use the Aadhaar Enabled Payment System (AePS) through their respective State Cooperative Banks as sub-AUA/KUA.
This follows the UIDAI’s new framework for cooperative bank onboarding on AePS, effective 1 August 2025, under which only State Cooperative Banks (StCBs) are required to register as Authentication User Agencies (AUA)/eKYC User Agencies (KUA).
The Minister also highlighted measures to strengthen cooperative lending. Non-scheduled Urban Cooperative Banks (UCBs), StCBs, and DCCBs notified as Member Lending Institutions (MLIs) under the CGTMSE Scheme can now benefit from risk coverage of up to 85% on loans extended, enabling greater credit flow to businesses. Cooperative sector enterprises can also avail collateral-free loans, improving access to finance.
Additionally, the CGTMSE eligibility criteria have been rationalized, allowing cooperative banks with Gross NPAs up to 7% (previously 5%) to register as MLIs under the Credit Guarantee Scheme (CGS). These reforms are expected to strengthen cooperative banks’ role in lending and enhance digital banking services across the sector.
