Ministry pushing RBI to open licences for more urban cooperative banks: Secretary Ashish Kumar Bhutani
GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims + Mains·
Why in news
Secretary of the Ministry of Cooperation urged the RBI to resume licensing Urban Cooperative Banks (UCBs) to enhance financial inclusion in smaller towns.
Background
Currently, only 300 out of 1,450 UCBs are located outside Maharashtra, Gujarat, and Karnataka. The RBI has halted new UCB licenses since 2004 but recently released a discussion paper on new licensing criteria.
Facts for Prelims
- BodyRBI: The primary regulatory body for cooperative banks and the central bank of India.
- FactUCB Distribution: Only ~20% of India's 1,450 UCBs are located outside three major states (MH, GJ, KA).
- FactGujarat Pilot Project: Resulted in a deposit increase of Rs 20,000 crore and issuance of 8 lakh Kisan Credit Cards.
- FactLicensing Freeze: The RBI has not issued new UCB licenses since 2004.
For Mains
Q. Examine the role of Urban Cooperative Banks in promoting financial inclusion and credit flow to rural and semi-urban economies in India.
Dimensions to cover in your answer
- Geographic imbalance: Concentration of UCBs in three states limits credit penetration in underdeveloped regions.
- Regulatory oversight: Balancing the need for rapid expansion with the risk of non-performing assets (NPAs) in cooperative structures.
- Credit penetration: Leveraging UCBs to facilitate targeted schemes like Kisan Credit Cards for small-scale farmers.
Keywords: Financial Inclusion · Cooperative Banking · Credit Penetration · Regulatory Framework · Last-mile Connectivity
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This note is generated automatically from SatyaDheesh's news feed and mapped to the UPSC CSE syllabus. Check facts against the original report or PIB before using them in an answer.