Amit Shah asks cooperatives to view RBI as facilitator, not regulator

Union Home Minister Amit Shah on Saturday said the Reserve Bank of India (RBI) has been proactive in supporting urban cooperative banks (UCBs), and urged the cooperative sector to shed its traditional wariness and view the regulator as a facilitator rather than an adversary.

Speaking at an event, Shah underscored that the RBI's recent initiatives have been aimed at strengthening the cooperative banking framework, and that the sector should leverage this support to expand its reach and modernise operations.

Changing the perception of the regulator

Shah noted that many cooperatives have historically approached the RBI with caution, often treating regulatory oversight as a hurdle. He argued that this mindset needs to change, especially as the central bank has shown a willingness to engage constructively with UCBs.

"The RBI has proactively helped UCBs," Shah said, adding that cooperatives should now look at the regulator differently. His remarks signal a push for greater trust and collaboration between the sector and the central bank.

Strengthening the cooperative banking network

The minister's comments come at a time when the government has been focusing on revitalising the cooperative movement, which plays a critical role in rural credit and grassroots financial inclusion. Urban cooperative banks, though smaller than commercial banks, serve millions of depositors and small borrowers across cities and towns.

In recent years, the RBI has taken several steps to bring UCBs under a more structured supervisory framework, including prompt corrective action (PCA) measures for weak banks and encouraging mergers. While these steps have sometimes been seen as tough, Shah's statement suggests a broader policy intent to support the sector's growth.

Cooperatives as engines of inclusive growth

Shah also highlighted the importance of cooperatives in achieving financial inclusion and supporting local economies. He called on UCBs to adopt better governance practices and leverage technology to improve efficiency and customer service.

Observers note that the government's push for "sahakar se samriddhi" (prosperity through cooperation) aligns with the RBI's regulatory goals of ensuring stability while enabling growth. The minister's remarks are likely to be welcomed by UCBs, which have often sought a more sympathetic ear from the central bank.

Industry experts say that a more collaborative relationship between UCBs and the RBI could lead to faster approvals for branch expansions, product launches, and technology upgrades, benefiting both the institutions and their customers.

What to watch next

As the cooperative sector awaits further regulatory guidance, all eyes will be on the RBI's upcoming policy announcements and any new schemes aimed at UCBs. The government's continued emphasis on cooperative banks suggests that more supportive measures may be in the pipeline, but the sector must also demonstrate its commitment to compliance and governance reforms.