Experts believe that the reason the RBI allowing the establishment of new UCBs is the adequate safeguards created by the statutory and administrative reforms. It is vindicated by the success of the UCBs like Saraswat and Cosmos Bank. These banks have demonstrated that well-managed cooperative banks can thrive even while accommodating weaker cooperative institutions to protect depositors. Along with the RBI encouragement the key factors associated with success are the professional management, freedom from political interference, and a strong governance framework.
Urban Cooperative Banks are an important link in the Indian financial system, connecting low- and middle-income urban and semi-urban populations with formal banking services. Looking back at history, it is found that India’s first cooperative credit institution was established in Bengal in 1903 with the support of the local government and was registered under the British Government’s Friendly Societies Act. Subsequently, the Cooperative Credit Societies Act was enacted in India on March 25, 1904...(Read the full article in the September 2026 issue)