At UCB meet, RBI stresses asset quality oversight, governance standards

RBI Governor Sanjay Malhotra urges urban co-operative banks to strengthen governance, underwriting and asset quality, reiterating their role in financial inclusion

Reserve Bank of India Governor Sanjay Malhotra on Monday, in a meeting with the chairpersons and managing directors and chief executive officers of select urban co-operative banks (UCBs), pointed to the importance of maintaining high standards of governance, robust underwriting practices and diligent oversight of asset quality.

 

The meeting was part of the RBI’s continued engagement with regulated entities. The previous such meeting was held on March 19, 2025. The participants included representatives from the National Urban Cooperative Finance and Development Corporation Limited and the National Federation of Urban Co-operative Banks and Credit Societies Limited.

 

The meeting was also attended by deputy governors Swaminathan J. and S C Murmu, apart from other senior officers of the Reserve Bank.

 

The governor also emphasised the relevance of UCBs in credit delivery and the need for adopting a customer-centric approach, following ethical practices, and timely grievance resolution to maintain customer trust in the sector.

 

“In his remarks, the Governor highlighted the continued relevance of UCBs in credit delivery, particularly to underserved areas, and in expanding financial inclusion. The Governor also briefly touched upon the various policy initiatives that have been undertaken by RBI relating to the co-operative banking sector since the previous interaction, and expressed confidence that these enablers will help the sector to become stronger and grow in a healthy manner,” the RBI said.

 

Recently, the RBI released a discussion paper on resuming the granting of licences to urban co-operative banks after a pause since 2004. It proposed a minimum capital requirement and certain asset quality parameters, which will be followed by draft norms.