Union Home Minister and Minister of Cooperation Amit Shah on Saturday inaugurated the new premises of the National Urban Cooperative Finance and Development Corporation (NUCFDC) in Mumbai and launched a series of technology and cybersecurity initiatives aimed at modernising the country’s urban cooperative banking sector.
Addressing the ‘Sahkar Nav-Kranti’ programme at the BSE International Convention Centre, HM Shah said the Umbrella Organisation for Urban Cooperative Banks had now become a reality with recognition from the Reserve Bank of India, adequate capital and the establishment of its new office.
The initiatives launched during the programme included a Security Operations Centre (SOC) for Urban Cooperative Banks and ‘Bank in a Box’, an integrated service bundle offering core banking, digital payments, cloud services and regulatory compliance facilities.
A Memorandum of Understanding was also exchanged between NUCFDC and the National Forensic Sciences University (NFSU) to strengthen cybersecurity and digital forensic capabilities across the urban cooperative banking network.
HM Shah said the Umbrella Organisation would provide Urban Cooperative Banks with technical and institutional support, assistance in complying with RBI regulations, employee training and access to modern software such as ‘MuleHunter’, which can help detect suspicious transactions and potential mule accounts.
“The objective of the Umbrella Organisation is not to earn profit, but to streamline Urban Cooperative Banks and prepare them to compete at the national and global levels,” Shah said.
He said the organisation would enable nearly 1,400 Urban Cooperative Banks to access technology, training, compliance support and modern banking infrastructure at affordable rates. Instead of individual banks purchasing and maintaining expensive systems separately, the Umbrella Organisation would negotiate collective contracts and provide shared services, substantially reducing costs.
‘Bank in a Box’ to help small banks adopt modern technology
HM Shah said the newly launched ‘Bank in a Box’ would allow even a small, single-branch Urban Cooperative Bank to provide world-class banking services without having to make heavy investments in technology.
The integrated platform will include core banking services, digital payments, cloud infrastructure and regulatory compliance solutions. Other services being developed under the umbrella framework include Sahkar CBS, shared payment services, a loan origination system, Sahkar Cloud, AI-based fraud prevention, group cyber insurance, Aadhaar-based services and automated regulatory compliance.
The Security Operations Centre will provide round-the-clock cyber monitoring and security support to participating Urban Cooperative Banks. HM Shah urged all UCBs to become members of the centre, saying cybersecurity and digital protection were increasingly important in an era of online banking.
He said the partnership with NFSU would bring cybersecurity training, digital forensics and research capabilities within the reach of even the smallest Urban Cooperative Bank at an affordable cost.
NUCFDC capitalised with over Rs 300 crore
HM Shah recalled that establishing an Umbrella Organisation for Urban Cooperative Banks had initially appeared to be an extremely difficult task.
After taking charge of the Ministry of Cooperation, he said, discussions were held with NABARD and other stakeholders on creating such an organisation. With the cooperation of Urban Cooperative Banks and the wider cooperative sector, Rs 306 crore was mobilised, enabling NUCFDC to undertake its operations and establish the necessary infrastructure.
He said 650 of the country’s nearly 1,400 Urban Cooperative Banks had so far joined the Umbrella Organisation, taking membership to almost 50 per cent.
HM Shah called on cooperative bank federations and UCB leadership across the country to ensure that all 1,400 banks join the organisation within the next year. He also stressed that membership fees should be structured according to the number of branches so that small and single-branch banks are not excluded.
UCBs hold nearly Rs 6 lakh crore in deposits
HM Shah highlighted the importance of Urban Cooperative Banks in providing credit to small traders, shopkeepers, cottage industries, MSMEs, local entrepreneurs, women’s self-help groups and middle-class borrowers.
He said nearly Rs 6 lakh crore was deposited with around 1,400 Urban Cooperative Banks across the country, underlining their importance to the economy.
HM Shah said UCBs have an advantage in reaching small borrowers because of their proximity to local communities. Recalling his experience as chairman of an Urban Cooperative Bank, he said small loans often had better repayment rates than larger loans.
He cited the example of a scheme under which his bank had provided loans of up to Rs 2.5 lakh without guarantees or collateral. The limit has since been increased to Rs 5 lakh, he said, adding that almost the entire amount disbursed had been recovered along with interest.
Maharashtra to become headquarters of NUCFDC
HM Shah said that the headquarters of NUCFDC would be shifted from Delhi to Maharashtra, citing the state’s large presence in the Urban Cooperative Banking sector.
Maharashtra has 449 Urban Cooperative Banks, the highest number in the country, while Maharashtra, Gujarat, Goa and Karnataka together account for a substantial share of the country’s UCBs.
The move, he said, would improve operational efficiency and enable the organisation to provide more effective support to banks.
Several regulatory reforms undertaken
HM Shah also highlighted a series of reforms undertaken for Urban Cooperative Banks in coordination with the RBI over the past five years.
These include allowing UCBs to open up to 15 per cent additional branches without separate permission, extending doorstep banking services, simplifying the process for eligible Tier-3 cooperative banks to obtain scheduled-bank status and appointing an RBI nodal officer for regular interaction with the sector.
The Priority Sector Lending target for UCBs has been reduced from 75 per cent to 60 per cent, while housing-loan limits have been enhanced. The One-Time Settlement facility has also been extended to UCBs.
HM Shah said UCBs had been provided a phased ‘glide path’ for compliance with provisions relating to non-performing asset accounts, preventing the entire financial burden from falling on banks in a single year.
He said UCBs, State Cooperative Banks and District Cooperative Banks had also been accorded the status of ‘Member Lending Institutions’, enabling risk coverage of up to 85 per cent and access to collateral-free lending. The Priority Sector Lending limit for cooperative societies has been increased from Rs 5 lakh to Rs 10 crore, he added.
Cooperation can create large enterprises from small contributions
HM Shah said cooperatives could play a crucial role in creating self-employment opportunities by pooling small contributions from large numbers of people.
He cited Amul, IFFCO, KRIBHCO and Lijjat Papad as examples of enterprises built through collective participation rather than the investment of a single large investor.
“‘Sahkar Se Samriddhi’ does not mean enriching the banks alone; it means ensuring prosperity for both the banks and their customers who generate self-employment,” he said.
HM Shah linked the strengthening of Urban Cooperative Banks to Prime Minister Narendra Modi’s vision of making India prosperous and a global leader by 2047.
He said achieving a developed and prosperous India would require not only capital-market growth but also a strong self-employment ecosystem capable of supporting small entrepreneurs, traders and other livelihood generators.
The minister expressed confidence that the Umbrella Organisation would become a vehicle of development for small towns and give fresh momentum to the ‘Sahkar Se Samriddhi’ movement.
The programme was attended by Maharashtra Chief Minister Devendra Fadnavis, Deputy Chief Minister Eknath Shinde, Union Ministers of State for Cooperation Krishan Pal Gurjar and Murlidhar Mohol, Maharashtra Cooperation Minister Babasaheb Patil, senior officials and representatives of Urban Cooperative Bank federations from across the country.
On the occasion, HM Shah released the book Operational Risk Management – A Practical Guide to Urban Co-operative Banks, authored by former RBI Deputy General Manager G. P. Mistry, as well as a coffee-table book chronicling the history of cooperative banking in India. He also felicitated representatives of the first six Urban Cooperative Banks to successfully join Sahkar CBS.