**Executive Summary**
The Reserve Bank of India (RBI), in consultation with the Government of India, has announced measures to strengthen cooperative banks' financial health, governance, and digital inclusion. These measures, effective January 19, 2026, include the eligibility of loans sanctioned by banks to NCDC for on-lending to cooperative societies as priority sector lending. Also, "Sahakar Sarthi" is set up as a Shared Services Entity to deliver technological services to Rural Cooperative Banks.
**Key Points / Main Content**
* **Priority Sector Lending:**
* 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 under respective categories, effective January 19, 2026.
* This applies to banks other than Regional Rural Banks, Urban Cooperative Banks, Small Finance Banks, and Local Area Banks.
* **Support and Regulation:**
* Urban Cooperative Banks (UCBs) can now open new branches.
* Housing loan limits for UCBs have been increased from 10% to 25% of their total loans and advances.
* The Banking Regulation Act has been amended to increase the terms of directors of Cooperative Banks from 8 to 10 years.
* Licensing fee for onboarding of cooperative banks to Aadhar enabled Payment System (AePS) have been reduced.
* The National Urban Co-operative Finance and Development Corporation Limited (NUCFDC) has been set up as an Umbrella Organization for Urban Cooperative Banks to provide IT infrastructure and operational support.
* A Shared Services Entity (SSE), Sahakar Sarthi, has been established to provide technological services to Rural Cooperative Banks.
* **Deposit Insurance and Protection:**
* Rural Cooperative Banks have been included by RBI in the Integrated Ombudsman Scheme.
* The Deposit Insurance and Credit Guarantee Corporation (DICGC) insures various types of deposits up to ₹5,00,000 per depositor per bank for all cooperative banks.
**Impact Analysis**
**Cooperative Societies:**
* **Impact:** Increased access to credit and financial assistance through the NCDC, along with technological advancements facilitated by "Sahakar Sarthi."
* **Action Required:** Understand and utilize the new priority sector lending eligibility for loans sanctioned to NCDC.
**Urban Cooperative Banks (UCBs):**
* **Impact:** Greater flexibility in opening new branches, expanded housing loan limits, and enhanced IT infrastructure support.
* **Action Required:** Leverage the new branch opening opportunities, adjust housing loan offerings accordingly, and utilize the support from NUCFDC.
**Rural Cooperative Banks:**
* **Impact:** Access to technological services through "Sahakar Sarthi" and inclusion in the Integrated Ombudsman Scheme.
* **Action Required:** Engage with "Sahakar Sarthi" for technological upgrades and familiarize with the Integrated Ombudsman Scheme.
**Bank Directors of Cooperative Banks:**
* **Impact:** Longer terms of service.
* **Action Required:** Be aware of the changes to the Banking Regulation Act and adhere to the new term limits.
**Depositors:**
* **Impact:** Greater deposit security.
* **Action Required:** Be aware of the Deposit Insurance and Credit Guarantee Corporation (DICGC) insures various types of deposits up to ₹5,00,000.
Key Entities Referenced
Reserve Bank of India (RBI): Regulator overseeing measures to strengthen Cooperative Banks.
National Cooperative Development Corporation (NCDC): Loans sanctioned to NCDC by banks are eligible for classification as priority sector lending for on-lending to cooperative societies.
Priority Sector Lending: Loans sanctioned to NCDC by banks are eligible for classification as priority sector lending for on-lending to cooperative societies, as per the Master Direction on Priority Sector Lending, 2025.
'Sahakar Sarthi': Shared Services Entity set up to deliver technological services to Rural Cooperative Banks.
Banking Regulation Act: Amended to increase the terms of directors of Cooperative Banks from 8 to 10 years.
Ministry of Finance
RBI Rolls Out Measures to Strengthen
Cooperative Banks’ Financial Health,
Governance and Digital Inclusion
Loans sanctioned by banks to NCDC for on-lending to
cooperative societies eligible for classification as priority
sector lending under the respective categories w.e.f. Jan. 19,
2026
Reforms include facilitating greater credit flow to cooperative
societies through NCDC under revised Priority Sector
Lending norms
‘Sahakar Sarthi’ set up as a Shared Services Entity to deliver
technological services to Rural Cooperative Banks
Posted On: 10 FEB 2026 4:26PM by PIB Delhi
The Reserve Bank of India (RBI), in consultation with the Government of India, has announced that loans
sanctioned by banks to National Cooperative Development Corporation (NCDC) w.e.f. January 19, 2026,
for on-lending to cooperative societies are eligible for classification as priority sector lending under the
respective categories. These apply to banks other than Regional Rural Banks, Urban Cooperative Banks,
Small Finance Banks and Local Area Banks. These loans are for purposes and activities as laid down in
the Master Direction on Priority Sector Lending, 2025.
National Cooperative Development Corporation (NCDC), a statutory corporation under the administrative
control of the Ministry of Cooperation, provides financial assistance to Cooperatives and contributes
directly in accelerating the growth of cooperative movement
The Government of India and RBI have taken various measures to strengthen cooperative banks’ financial
health, governance and digital inclusion along with enhancing deposit security, credit availability and
prudent regulation, which inter-alia include:
Urban Cooperative Banks (UCBs) have been allowed to open new branches
Housing loan limits have been increased from 10% to 25% of their total loans and advances for
UCBs
The Banking Regulation Act has been amended to increase the terms of directors of Cooperative
Banks from 8 to 10 years
Licensing fee for onboarding of cooperative banks to Aadhar enabled Payment System (AePS) have
been reducedThe National Urban Co-operative Finance and Development Corporation Limited (NUCFDC),
which is a non-deposit taking Non-Banking Financial Company (NBFC), has been set up as an
Umbrella Organization for Urban Cooperative Banks to provide Information Technology (IT)
infrastructure and operational support
A Shared Services Entity (SSE), Sahakar Sarthi, has been established to provide technological
services to Rural Cooperative Banks
Rural Cooperative Banks have been included by RBI in the Integrated Ombudsman Scheme
Deposit Insurance and Credit Guarantee Corporation (DICGC) insures various types of deposits up
to ₹ 5,00,000 per depositor per bank (including principal and interest) for all cooperative banks
This information was given by the Minister of State in the Ministry of Finance Shri Pankaj Chaudhary in
Rajya Sabha today.
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