Given India’s Size, We need 2,500 new UCBs: RBI Director Marathe

RBI Central Board member and senior cooperator Satish Marathe has called for a major expansion of India’s cooperative banking network, saying it is essential for deepening financial inclusion, accelerating GDP growth and achieving the country’s Sustainable Development Goals (SDGs).

Speaking at the release of the book, Cooperative Management- The Indian Perspective authored by K K Tripathy and others, Marathe said the publication presents both the historical evolution of the cooperative movement and its continuing relevance in addressing present-day economic and social challenges.

Highlighting India’s progress in financial inclusion, Marathe noted that the proportion of people with bank accounts has increased from around 50 per cent in 2011 to nearly 80 per cent today. However, he maintained that the country still faces a significant shortage of grassroots banking institutions, particularly cooperative banks that cater to local communities.

Marathe observed that nearly 100 cities in India still do not have cooperative banking facilities. He pointed out that only around 350 District Central Cooperative Banks (DCCBs) currently cater to more than 700 districts, making a strong case for establishing at least 600 viable DCCBs to ensure wider geographical coverage and better access to institutional credit.

He also stressed the need for a substantial expansion of the Urban Cooperative Banking sector. According to Marathe, India requires at least 2,500 Urban Cooperative Banks (UCBs) considering its size and population. Such locally managed institutions, he said, are best placed to extend financial services to weaker sections, small entrepreneurs, self-employed individuals and other underserved segments that often remain outside the reach of larger commercial banks.

Referring to India’s changing socio-economic landscape, Marathe said nearly 25 crore people have moved out of poverty in recent years, while another 15 crore people have become self-employed over the last five years.

Together, these nearly 40 crore citizens will require easy access to affordable credit, savings and other financial services, making a robust cooperative banking network indispensable.

Marathe also advocated the creation of a separate deposit guarantee mechanism for credit cooperatives. Pointing out that nearly Rs 42 lakh crore is currently in cash circulation, with almost half of it concentrated in rural India, he said cooperative institutions could initially mobilise deposits of around Rs 2 lakh crore if supported by an appropriate regulatory and guarantee framework.

Calling for comprehensive legal and regulatory reforms, Marathe said cooperative banks need greater access to financial resources and a more enabling policy environment so that they can play a larger role in inclusive economic development and nation-building.