Amit Shah New Venture: Launch of NUCFDC

On March 2, 2024, Cooperation Minister Amit Shah launched the National Urban Cooperative Finance and Development Corporation (NUCFDC), a new initiative to upgrade and support the urban cooperative banking sector in India. The NUCFDC is an umbrella organization that will provide technology and capital support to small urban cooperative banks, as well as act as a self-regulatory body for the sector. The NUCFDC has received the approval from the Reserve Bank of India (RBI) to operate as a non-banking finance company (NBFC) and serve the urban cooperative banks.

Shah said that the establishment of NUCFDC is another milestone in achieving the goal of ‘Sahakar se Samriddhi’ (Prosperity through Cooperation) under the leadership of Prime Minister Narendra Modi. He said that urban cooperative banks have a long history in India, but could not grow rapidly due to various challenges such as technology constraints, regulatory issues, and lack of capital. He said that NUCFDC will help urban cooperative banks to overcome these challenges and offer a wider range of services to their customers at a lower cost.

The NUCFDC aims to raise capital from various sources, including urban cooperative banks and other stakeholders, with plans to reach a capital base of Rs.300 crores. It will use this capital to support urban cooperative banks with liquidity and refinancing. It will also set up a shared technology platform that will enable urban cooperative banks to provide ATM facility, credit/debit cards, clearing system, and maintain SLR (statutory liquidity ratio) limit. It will also offer fund management and other consultancy services to urban cooperative banks.

Shah said that NUCFDC will ensure specialized function and services to cooperative banks, facilitate communication between banks and regulators, and address challenges faced by Urban Cooperative Banks. He also said that NUCFDC will bring professionalism and transparency in the urban cooperative banking sector. He asked NUCFDC to set up one urban cooperative bank in each town in India.

At present, there are over 1,500 scheduled and non-scheduled urban cooperative banks in India with a total number of branches exceeding 11,000. The banks have a deposit size of over Rs 5.33 lakh crore, and total lending of more than Rs 3.33 lakh crore. The launch of NUCFDC is expected to boost the growth and performance of these banks and benefit their customers.

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