Urban Cooperative Banking in India : Key Issues and Way Forward

Co-operatives are successful business organisations all over the world and have a presence in almost all spheres of economic activities, including banking and financial services. The success of co-operatives shows that it is possible to simultaneously pursue both economic viability and social responsibility through equitable, democratic, and people-centric organizations. However, in India due to various reasons, the Primary (Urban) Co-operative Banks (UCBs) have not been able to achieve their full potential. The UCB sector is highly heterogeneous in terms of asset size and faces several challenges relating to the business model, governance, and professional management. Following the amendments (2020) to the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies), Reserve Bank has recently constituted an expert committee to provide a roadmap for strengthening the sector. This paper focusses upon the key issues faced by the UCB sector and suggests a future direction