Urban Cooperative Banks (UCBs) have received a policy boost with a series of reforms aimed at strengthening their operations and expanding services, the government informed the Rajya Sabha on Tuesday.
Replying in the House, Minister of State for Finance Pankaj Chaudhary said UCBs are allowed to open new branches based on their board-approved policies, subject to guidelines issued by the Reserve Bank of India.
To improve business opportunities for cooperative banks, RBI has introduced Eligibility Criteria for Business Authorization (ECBA), creating a harmonised framework for approvals and permissions.
The government has also expanded lending capacity by increasing the housing loan limit for UCBs from 10% to 25% of their total loans and advances, enabling them to play a bigger role in housing finance.
In another governance reform, amendments to the Banking Regulation Act have extended the tenure of UCB directors from eight years to ten years, ensuring continuity in leadership.
To support modernization, the National Urban Co-operative Finance and Development Corporation Limited has been set up as an umbrella institution to provide technology infrastructure and operational support to UCBs.
Depositors in UCBs also benefit from protection under the Deposit Insurance and Credit Guarantee Corporation, which insures deposits up to Rs 5 lakh per depositor per bank.