A delegation comprising Maharashtra Urban Co-operative Banks’ Federation (MUCBF) Chairman Ajay Barmecha, Cosmos Co-operative Bank Chairman Sachin Apte, NAFCUB Director Sunil O.P. Deora and other sector representatives met Union Minister of State for Cooperation Murlidhar Mohol in Pune on Monday and submitted a memorandum seeking intervention on a range of regulatory and policy issues affecting Urban Cooperative Banks (UCBs).
A key demand was the review of provisions introduced under the Banking Laws (Amendment) Act, 2025 relating to director tenure and board composition.
The Federation urged the Government to reconsider tenure restrictions on directors, arguing that cooperative bank directors are elected by members through a democratic process and should not be disqualified solely on account of prescribed tenure limits.
The Federation also opposed the requirement, introduced through a December 2025 notification, mandating that 51 per cent of directors on cooperative bank boards possess prescribed qualifications.
It contended that the norm could render many experienced directors ineligible despite their long-standing contribution to the growth and stability of cooperative institutions. The Federation warned that the combined impact of tenure restrictions and qualification requirements could weaken governance continuity and affect the autonomy of cooperative banks.
The memorandum further highlighted the provisioning burden faced by nearly 100 UCBs following the conversion of institutional deposits in the erstwhile Punjab and Maharashtra Co-operative Bank into investments in Unity Small Finance Bank. The Federation sought regulatory relief, stating that the provisions continue to affect profitability despite Unity SFB’s improved financial performance.
Another major concern related to the RBI’s revised branch authorisation framework issued in December 2025, particularly the requirement to maintain Rs 2 crore headroom capital for opening new branches. According to the Federation, the norm could severely restrict expansion by Tier-I UCBs operating in rural and semi-urban areas.
Among other demands, the Federation sought relaxation in inter-bank exposure norms, financial assistance for banks operating under RBI restrictions, removal of prior RBI approval for utilisation of funds created from net profits, and exclusion of loans backed by fixed deposits from the cap on advances above Rs 25 lakh.
It also sought permission for UCBs to offer housing loans with repayment tenures of up to 30 years, review of commercial real estate exposure limits, relaxation in certain Priority Sector Lending norms, extension of the Small Value Loans compliance deadline till 2030, and enhancement of loan limits for nominal members.
Barmecha urged the Centre to take up the issues with the RBI and facilitate discussions with Union Cooperation Minister Amit Shah and Cooperation Secretary Dr. Ashish Bhutani.
