RBI likely to reopen licensing window for urban co-operative banks

The Reserve Bank of India (RBI) is likely to revive the issuance of fresh licences for urban co-operative banks (UCBs), a move that would end a two-decade pause on new entrants in the sector, according to a report. 

According to a report in NDTV Profit — citing sources — the central bank is expected to approve fresh licences for UCBs, a practice it had discontinued in 2004.

The development comes after the RBI released a discussion paper in January seeking feedback on whether it should resume granting licences to urban co-operative



banks. 

The RBI has received positive responses to the proposal, with industry participants supporting the move while also suggesting that the proposed minimum capital requirement of Rs 300 crore be reduced, the report said.

It further noted that regulatory oversight and supervisory standards for urban co-operative banks have improved significantly since 2004, giving the central bank greater comfort in considering the resumption of licensing. In its discussion paper, the RBI outlined several potential benefits of allowing new UCBs to enter the sector.