The Reserve Bank of India (RBI) has widened the investment framework for Urban Co-operative Banks (UCBs), allowing them to acquire equity shares of the Umbrella Organisation (UO) of the UCB sector, Indian Digital Payment Intelligence Corporation (IDPIC), Central Cooperative Banks (CCBs) and State Cooperative Banks (StCBs), where such investment is necessary for acquiring membership.
The RBI, through the Reserve Bank of India (Urban Co-operative Banks – Classification, Valuation and Operation of Investment Portfolio) Second Amendment Directions, 2026, issued on Wednesday, amended the provisions relating to investments in non-SLR securities.
Under the amended provisions, UCBs can acquire equity shares of the Umbrella Organisation (UO) of the UCB sector and IDPIC for acquiring membership.
The revised framework further permits investment in equity shares of Market Infrastructure Companies (MICs), the UCB sector’s Umbrella Organisation, IDPIC, CCBs and StCBs, if such investment becomes necessary for obtaining membership of these entities.
For the UCB sector, the amendment provides a clear regulatory route for banks to acquire equity in National Urban Cooperative Finance and Development Corporation (NUCFDC), the sector’s Umbrella Organisation, where equity participation is a prerequisite for membership.
Similarly, UCBs can acquire equity shares of IDPIC, established as the country’s central digital payment fraud intelligence platform, where such shareholding is required to obtain membership.
The RBI clarification, however, does not automatically confer membership on UCBs. It only permits the required equity investment where membership rules of the respective entity make such shareholding necessary.
The amended directions have come into effect from September 2, 2026.
