The cooperative banking sector witnessed significant strengthening in 2025, driven by focused policy interventions of the Department of Financial Services (DFS), Ministry of Finance, aimed at improving governance, financial resilience and rural credit delivery.
Asset quality of Rural Cooperative Banks and Regional Rural Banks (RRBs) showed marked improvement. As per NABARD data, the Gross NPA ratio of RRBs declined to 5.4 per cent in March 2025 from a peak of 10.8 per cent in 2019, while the Provision Coverage Ratio rose to 65.1 per cent. Capital adequacy of RRBs also reached a record high of 14.4 per cent, reflecting enhanced balance sheet strength.
Cooperative banks continued to play a pivotal role in agricultural financing. As of September 2025, 43 per cent of the 7.81 crore operative Kisan Credit Card (KCC) accounts were held with cooperative banks, underlining their dominance in providing timely and affordable credit to small and marginal farmers.
To further strengthen institutional capacity, the Government approved the creation of an additional Deputy Managing Director post in NABARD, enabling sharper focus on climate finance, sustainability initiatives, digital transformation, fintech engagement and cooperative sector development.
Complementing this, amendments to the Banking Regulation Act, 1949 enhanced the tenure of directors in cooperative banks (excluding chairpersons and whole-time directors) from eight to ten years, aligning governance norms with the 97th Constitutional Amendment and strengthening depositor protection through leadership continuity.
These reforms reinforce cooperative banks as vital instruments of inclusive and sustainable economic growth, aligned with the vision of Viksit Bharat @2047.
