RBI: Measures for Financial Health, Governance, and Digital Inclusion to Strengthen Cooperative Foundations
SDG 8: Decent Work and Economic Growth | SDG 9: Industry, Innovation and Infrastructure | SDG 10: Reduced Inequalities
Reserve Bank of India (RBI) | National Cooperative Development Corporation (NCDC) | Ministry of Cooperation
The RBI has announced several strategic initiatives to bolster the cooperative banking sector. Effective January 19, 2026, loans sanctioned by banks to the National Cooperative Development Corporation (NCDC) for on-lending to cooperative societies are eligible for classification as Priority Sector Lending (PSL). This move aims to facilitate greater credit flow to the grassroots level, particularly through the revised PSL norms of 2025. Additionally, to drive digital inclusion and technical resilience, the ‘Sahakar Sarthi’ initiative has been established as a Shared Services Entity to provide modern technological and audit services to Rural Cooperative Banks.
Strategic Pillars for Cooperative Sector Resilience The latest regulatory rollout highlights several foundational pillars for the sector’s long-term stability:
Enhancing Credit Delivery and Accessibility: The reclassification of bank loans to NCDC as PSL ensures that more capital is available for cooperative societies to benefit their members directly.
Strengthening Governance and Accountability: The Banking Regulation Act has been amended to increase the tenure of directors of Cooperative Banks from 8 to 10 years, aligning with Constitutional provisions.
Scaling Digital and Financial Inclusion: Licensing fees for onboarding cooperative banks to the Aadhaar-enabled Payment System (AePS) have been reduced to encourage the adoption of paperless, digital banking services.
Institutional Support and Capacity Building: The National Urban Co-operative Finance and Development Corporation (NUCFDC) has been operationalized as an umbrella organization to provide IT infrastructure and operational support to Urban Cooperative Banks (UCBs).
Customer Protection and Grievance Redressal: Rural cooperative banks have been integrated into the RBI Integrated Ombudsman Scheme, bringing higher transparency and accountability to their functions.
What is the “Sahakar Sarthi” initiative in the cooperative sector? ‘Sahakar Sarthi’ is a Shared Services Entity (SSE) approved by the RBI specifically to support Rural Cooperative Banks (RCBs) with modern technological and audit services. It aims to bridge the digital divide by enabling even small RCBs to adopt compliant digital payment and lending systems without the prohibitive cost of individual centralized infrastructure. By providing standardized IT solutions, it enhances operational efficiency, improves transparency in record-keeping, and ensures that rural credit delivery meets modern cybersecurity and consumer protection standards.
Policy Relevance
The 2026 measures represent a transition from fragmented oversight to a unified, technology-driven regulatory framework for cooperatives. By institutionalizing the Sahakar Sarthi framework and aligning cooperative governance with commercial banking standards, the RBI is ensuring that the cooperative movement can realize the vision of “Sahakar Se Samriddhi” (from cooperation to prosperity) in a digital-first economy.
Strategic Impact:
Boosting Last-Mile Credit Delivery: Classifying loans to NCDC as Priority Sector Lending incentivizes commercial banks to channel trillions of rupees into the cooperative sector, directly empowering Farmer Producer Organizations (FPOs) and primary societies.
Technological Modernization: The establishment of Sahakar Sarthi and NUCFDC as shared infrastructure providers allows small cooperative banks to “leapfrog” into modern UPI and digital lending ecosystems without massive individual CAPEX.
Strengthening Financial Stability: Increasing the housing loan limit for UCBs from 10% to 25% of total advances provides these banks with high-quality asset classes to diversify their portfolios and improve financial health.
Enhancing Investor and Depositor Trust: Integrating rural banks under the Integrated Ombudsman Scheme and maintaining DICGC insurance up to ₹5 lakh per depositor ensures that the grassroots cooperative system is as safe as the scheduled commercial banking sector.
Relevant Question for Policy Stakeholders: How can the Ministry of Cooperation and the RBI leverage the newly formed ‘Sahakar Sarthi’ and ‘National Reference Architecture’ for Sovereign AI to automate audit compliance and fraud detection across all integrated rural cooperative banks by 2028?
Follow the full news here: RBI Measures to Strengthen Cooperative Banks