Emphasizing that strong governance underpins the stability and credibility of the cooperative banking sector, Reserve Bank of India governor Sanjay Malhotra on Monday urged urban co-operative banks (UCBs) to uphold high standards of oversight, underwriting discipline and asset quality management.
The governor made the remarks at a meeting in Mumbai with chairpersons, managing directors and chief executive officers of select urban co-operative banks, as part of RBI's ongoing engagement with regulated entities. The previous such interaction was held on 19 March 2025.
In his address, Malhotra noted the continued relevance of UCBs in credit delivery—particularly in the underserved and semi-urban areas—and their role in furthering financial inclusion. He said the sector remains an important pillar of the formal financial system, especially for small borrowers, local businesses and communities that are often outside the reach of large commercial banks.
He also referred to various policy initiatives undertaken by RBI for the cooperative banking sector since the last such interaction, expressing confidence that these measures would act as enablers for the sector to strengthen itself and grow in a healthy and sustainable manner. Without detailing any specific steps, the governor indicated that regulatory reforms and supervisory actions were aimed at improving resilience and long-term viability.
Risk controls
A key focus of Malhotra's remarks was on governance and risk management, wherein he underscored the importance of robust underwriting practices, diligent monitoring of asset quality and effective internal controls. These are essential not only for financial soundness of the banks but also for preserving depositor confidence, he said.
Beyond financials, Malhotra also emphasized on the need for a customer-centric approach. He called on UCBs to adhere to ethical practices, ensure timely grievance redressal and maintain transparency in their dealings, noting that customer trust was central to the sector’s relevance and growth.
The meeting was also attended by deputy governors Swaminathan J. and S.C. Murmu, along with other senior RBI officials. Representatives from the National Urban Cooperative Finance and Development Corporation Ltd and the National Federation of Urban Co-operative Banks & Credit Societies Ltd were also present.
During the interactive session, participants shared feedback and suggestions on policy and operational issues affecting the sector, reflecting the ongoing dialogue between the regulator and cooperative banks.
