RBI Urges UCBs to Strengthen Governance, Adopt Technology Responsibly

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Pune: The Reserve Bank of India (RBI) has called on
Urban Cooperative Banks (UCBs) to tighten governance, empower risk and audit functions, and adopt digital services responsibly with strong cybersecurity.

Addressing the seminar “Resilient Cooperatives for the Future: Enhancing Governance in a Digital Age” organised by the College of Agricultural Banking, the RBI underscored that depositor
trust is non-negotiable and must be protected through
sound governance, effective risk management, and transparent decision-making.

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The central bank noted recent sectoral support including a four-tier regulatory framework, revised
priority sector lending norms, and the creation of an
Umbrella Organisation (NUCFDC) to help UCBs access shared technology, compliance capacity, and liquidity support. Still, the RBI stressed that lasting resilience “must come from within.”

Key messages to UCB Directors

• Strengthen governance & accountability: Boards must be active and independent; weak oversight remains a root cause of distress.
• Empower assurance functions: Risk, audit and compliance should be independent, senior, and in direct touch with the Board.
• Engage with auditors & RBI inspectors: Treat findings as tools for improvement; ensure time-bound corrective action.
• Adopt technology responsibly: Expand digital services only with robust systems, trained staff, and strong cybersecurity.
• Leverage collective scale: Use the Umbrella Organisation for shared platforms, capacity building, and fund-based facilities.

With the United Nations declaring 2025 the International Year of Cooperatives, the RBI said UCBs must pair their community-centric identity with modern oversight, prudent risk culture, and secure technology to remain resilient and relevant.

The address concluded with a call to action: governance must be sharper, risks better understood, technology adopted thoughtfully, and the trust of depositors safeguarded at all times. The RBI affirmed it stands with UCBs “as a regulator, a guide, and a partner.”