RBI Permits Co-operative Banks to Invest in NABARD’s Shared Service Entity
The Reserve Bank of India (RBI) has issued new directions allowing
State Co-operative Banks (StCBs) and Central Co-operative Banks (CCBs)
to invest in the share capital of a Shared Service Entity (SSE) established by NABARD.
This marks a significant step towards strengthening India’s co-operative banking infrastructure and
expanding flexibility in non-SLR investments.
Key Provisions of the New Directions
The changes have been issued under the RBI (Investments in Non-SLR instruments by State / Central
Co-operative Banks) Directions, 2025, which amend the earlier circular from July 14, 2016.
- StCBs and CCBs may voluntarily subscribe to SSE shares.
- Such investments are capped at 5% of the bank’s owned funds
(paid-up capital + reserves). - These will be exempt from prudential limits on non-SLR investments and restrictions on unlisted securities.
RBI emphasized that the amendments are made under Sections 35A and 56 of the Banking Regulation Act, 1949,
in the public interest. The move is designed to help co-operative banks modernize operations and adopt new technologies
through NABARD’s SSE.
Shared Services Entity: Sahakar Sarathi
NABARD, in collaboration with the National Cooperative Development Corporation (NCDC) and
Rural Cooperative Banks (RCBs), has established the SSE named
Sahakar Sarathi.
With an authorized capital of ₹1,000 crore, contributions are divided equally:
- NABARD – ₹333.33 crore
- NCDC – ₹333.33 crore
- RCBs – ₹333.34 crore
The SSE will provide essential digital and operational services including internet and mobile banking,
UPI, AEPS, cybersecurity, and back-end operations.
Services & Operational Benefits
Sahakar Sarathi will operate across three verticals: Technology,
Operations, and Support Functions. Its services include:
- Core Banking Solutions (CBS)
- Fraud Risk Management
- Loan Origination Systems
- Human Resources (HR) Services
- IT Procurement
The initiative aims to reduce operational costs,
improve service delivery, and ensure regulatory compliance.
This will enable co-operative banks to compete effectively with commercial banks while serving
rural customers more efficiently.
Background
A few months ago, NABARD also hosted a National Conference on “Shared Services Entity and Cooperation among Cooperatives”
at NBSC, Lucknow. The event was attended by Dr. Ashish Kumar Bhutani, Secretary, Ministry of Cooperation.
Source: RBI Circular | This article has been rewritten for structured presentation.
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