Reserve Bank of India Governor Sanjay Malhotra speaks of the monetary policy statement | Photocredit: RBI via PTI Photo
After an interruption of more than two decades, the RBI may consider giving licenses for setting up new urban cooperative banks (UCBS).
“Since 2004, the issue of new licenses for UCBS has been paused after the weak financial health of the UCB sector.
“In view of the fact that since then more than two decades and the positive developments in the sector, a discussion document about the licenses of new UCBs will soon be published,” said Gouverneur Sanjay Malhotra.
From the end of March 2024 there were 1,472 UCBs in the country. In its report on the trend and the progress of banking in India, the RBI noted that the number of UCBs that was increased in the 1990s, driven by a liberal license policy. Over the years, almost a third of the newly licensed banks have become financially defective.
“From 2004-05, the Reserve Bank started a process of consolidation, including merging of non-living UCBs with their viable counterparts, closing of non-living entities and suspension of the issue of new licenses. As a result, the number of UCBs in the last two decades of 1.926,” per report decreased per report of 1.926, “
The report noted that the deposit growth of all UCBs showed a marginal improvement to 4.1 percent in 2023-24, which remained well under 13.4 percent growth in SCBs (planned commercial banks). Credit growth of UCBs was stable at 5.0 percent in 2023-24, less than a third of the 16.0 percent expansion registered by SCBS.
Pabhat Chaturvedi, CEO, National Urban Cooperative Finance & Development Corporation (NUCFDC), said: “We welcome the announcement of the RBI to publish a discussion document on the permits of New Urban Coopums. This future -oriented initiative.
“If the umbrella organization of these UCBs, NUCFDC regards this as an important step to deepen financial inclusion, improve the credit flow and to strengthen the stability and credibility of UCBs in the financial ecosystem of India.”
Published on October 1, 2025
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