RBI to resume licensing of Urban Cooperative Banks
The Reserve Bank of India (RBI) plans to resume licensing for urban cooperative banks after a two-decade pause to foster a more vibrant cooperative sector. Additionally, the RBI is reviewing prudential norms for rural cooperative banks and rationalizing interest rate frameworks.
Why it matters
These regulatory changes are intended to modernize the cooperative banking sector, improve financial stability, and standardize lending practices across India.
The Reserve Bank of India (RBI) is set to resume licensing of urban cooperative banks (UCBs), after a pause of more than two decades, as part of developing a vibrant co-operative sector.
“It has been decided to resume licensing of UCBs on ‘on tap’ basis,” RBI Governor Sanjay Malhotra announced as one of the additional measures. The draft guidelines would be issued shortly for stakeholder consultation, he added.
A discussion paper on Licensing of UCBs was published for stakeholder feedback on January 13, 2026 and the decision has been taken based on the feedback from stakeholders.
As per RBI and NABARD, there are 1,457 urban cooperative banks.
The RBI has also decided to review the guidelines on concentration risk management of rural co-operative banks (RCBs).
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