Union Minister of State for Finance Pankaj Chaudhary announced that the Government of India and the Reserve Bank of India (RBI) have initiated several measures to diversify the business operations of cooperative sector banks.
These measures aim to enhance the role of State Cooperative Banks (StCBs), District Central Cooperative Banks (DCCBs), and Primary (Urban) Cooperative Banks in various sectors, particularly housing and MSMEs, Chaudhary was speaking in the House.
Chaudhary highlighted that StCBs and DCCBs are now permitted to extend Commercial Real Estate-Residential Housing (CRE-RH) loans within their housing finance limits, set at 5% and 10% of total assets, respectively.
Additionally, the RBI has raised the individual housing loan limits for these banks. For banks with a net worth of less than Rs 100 crore, the limit has increased from Rs 20 lakh to Rs 50 lakh, and for banks with a net worth of Rs 100 crore or more, the limit has increased from Rs 30 lakh to Rs 75 lakh.
Furthermore, StCBs and DCCBs can now become co-branding partners of card issuers without prior RBI approval, as per an amendment dated March 7, 2024, in the Master Direction on Credit Card and Debit Card (Issuance and Conduct Directions, 2022).
In a move to further diversify their portfolios, the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) has included StCBs and DCCBs as Member Lending Institutions (MLIs). This inclusion allows these banks to expand their lending to the Micro, Small, and Medium Enterprises (MSME) sector.
Chaudhary also informed that StCBs and DCCBs are now eligible for various Government of India schemes, including the Agriculture Infrastructure Fund (AIF), PM Vishwakarma Scheme, PM Surya Ghar: Muft Bijli Yojana, and the PM Formalisation of Micro Food Processing Enterprises (PMFME) Scheme, facilitating credit penetration in underserved sectors.
Additionally, the National Bank for Agriculture and Rural Development (NABARD) has launched several refinance schemes, such as the Special Long-Term Refinance for Primary Agriculture Credit Societies (PACS) as Multi Service Centres and Special Refinance Schemes (SRS) for promoting micro food processing enterprises and WASH activities.
Minister Chaudhary emphasized that these initiatives provide cooperative banks with new business avenues and enhance their role in the housing sector, supporting the broader goal of affordable housing for all.
