RBI Proposes Resuming Licensing of Urban Cooperative Banks with New Criteria

The Reserve Bank of India (RBI) has proposed resuming the licensing of Urban Cooperative Banks (UCBs) after a two-decade pause, issuing a discussion paper inviting stakeholder feedback by February 13, 2026. The proposal includes a minimum capital requirement of Rs 300 crore and emphasizes licensing only large, financially sound co-operative credit societies with strong governance and asset quality. The RBI highlighted past challenges with smaller UCBs becoming financially unsound and seeks views on eligibility criteria and timing for resumption.