Inauguration of the National Urban Cooperative Finance and Development Corporation Limited (NUCFDC)
Context:
Recently, the Union Minister for Cooperation inaugurated the National Urban Cooperative Finance and Development Corporation Limited (NUCFDC), which serves as an umbrella organization for urban cooperative banks (UCB).
Main Highlights:
- NUCFDC has received approval from the Reserve Bank of India (RBI) to operate as a non-banking finance company and function as a self-regulatory organization for the urban cooperative banking sector.
- These financial institutions, owned and operated by their members, cater to the financial needs of urban and semi-urban areas. They are registered under the Cooperative Societies Act of the respective states or the Multi-State Cooperative Societies Act, 2002.
- The urban cooperative banking movement in India traces back to the late 19th century, inspired by successful cooperative models in Britain and Germany. The earliest cooperative societies and credit societies date back to the early 1900s.
- The Reserve Bank of India regulates the banking functions of UCBs under the Banking Regulation Act, 1949. Additionally, UCBs registered with the Deposit Insurance and Credit Guarantee Corporation are insured.
- Following recommendations by the N. S. Vishwanathan committee in 2021, UCBs are organized into a four-tier structure based on their deposit sizes. This structure ensures minimum capital requirements and risk management standards.
- With 1,514 UCBs across India, these institutions contribute significantly to agricultural credit, accounting for 11% of total credit to agriculture. The total deposit base of UCBs amounts to ₹5.26 trillion.
