Only a handful of large multi-state co-operative credit societies (MSCCS) may be eligible for conversion into urban co-operative banks (UCBs), going by the stiff eligibility criteria proposed in RBI’s discussion paper on licensing of new UCBs.
Large MSCCS’ such as Buldana Urban Co-operative Credit Society (area of operation: Maharashtra, Chhattisgarh and Rajasthan), Lokmanya Multipurpose Cooperative Society (Karnataka, Maharashtra, Goa, and Delhi), and Shri Beereshwar Co-Op Credit Society Ltd (Karnataka, Maharashtra and Goa) may be among the few that may make the cut for a UCB license.
Buldana Urban Co-operative Credit Society, which is India’s largest MSCCS, has deposits and advances of R₹15,556 crore and R₹11,256 crore, respectively, per its website.
As per the cover page of Lokmanya Multipurpose Cooperative Society’s FY2025 annual report (which can be accessed only by its members), it has deposits of R₹10,000 crore.
Shri Beereshwar Co-Op Credit Society has deposits of 4,857 crore and loans and advances of R₹3,627 crore.
After the May 1993 liberalisation of licensing norms, 823 UCB licenses were issued by RBI till June 2001. However, the central bank paused licensing of UCBs in 2004 as it found that 31 per cent of these banks had become financially unsound within a short span of time.
The RBI is now seeking to open up licensing of new UCBs in the backdrop of the positive developments in the sector (including larger business, strong Capital to Risk-weighted Asset Ratio/CRAR, improved asset quality) during the last two decades.
In its discussion paper on licensing of new UCBs, the RBI underscored that if licensing is resumed for UCBs, it may be prudent to license only large co-operative credit societies, with active operations for at least 10 years and a good financial track record of at least five years, and which can meet the minimum capital requirement of R₹300 crore.
Co-operative banking expert D Krishna said: “At first reading of the Discussion Paper, I felt that hardly any co-operative credit society will be eligible for conversion into urban co-operative bank in view of such stiff conditions.
“It is apparently RBI’s way of saying “we have opened licensing of urban banks”, just to answer the Government.”
Vinayak Y Tarale, Expert Director, The Maharashtra State Co-operative Banks Association, observed that even if licensing is opened up for large multi-state co-operative credit societies to transition into UCBs, they will tread carefully, weighing the implications of getting regulated and supervised by RBI.