Page 18 - Banking Finance August 2025

CO-OPERATIVE BANK NEWS

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o-O
o-Operative Bank
C C C C Co-Oo-Oppeerraattiivve Be Baannkk

News

RBI proposes easing RBI denies Credit Institu- CICs play a crucial role in the lending
ecosystem by collecting, maintaining,
tion status to oldest rural
business authorisation and analyzing credit data of individu-
lenders, Kheti Banks als and businesses. The credit scores
norms for urban coop- they assign, ranging from 300 to 900,
In a move that has sparked concern
erative banks within the cooperative credit struc- are critical in determining loan eligibil-
The RBI on Monday proposed to ture, the Reserve Bank of India (RBI) ity and terms, with scores above 750
replace the existing norms for ur- has declined the request of State Co- generally considered favourable.
ban cooperative banks (UCBs) with operative Agriculture and Rural Devel- However, in the current setup, credit
a harmonised eligibility criteria for opment Banks (SCARDBs) to be recog- transactions from SCARDBs are not
certain business authorisations, nized as Credit Institutions under the captured in the CIC databases, creat-
permissions and approvals. Credit Information Companies (Regula- ing a blind spot in the credit history of
The Reserve Bank has proposed tion) Act, 2005 (CICRA). borrowers.
that large UCBs (falling in Tier 3 and The apex body of Agriculture and Ru- This regulatory exclusion means that
Tier 4 categories) which are in ral Development Banks (ARDBs)- even wilful defaulters of SCARDBs may
compliance with eligibility criteria Nafcard has urged the central bank to maintain high credit scores and secure
for business authorisation (ECBA) revisit its decision, asserting that inclu- loans from other financial institutions
and having a minimum assessed sion of SCARDBs in Credit Information under favourable terms. “This is not a
minor concern, especially when institu-
net worth (ANW) of Rs 50 crore Companies (CICs) would strengthen
tions with over crore member house-
may extend their area of operation the credit information ecosystem and holds are excluded from the credit re-
beyond the state of registration, lead to more accurate credit scores.
subject to prior approval of the porting framework,” said a senior offi-
The Long-Term Cooperative Credit cial of the federation. T
Reserve Bank. Structure (LTCCS), comprising SCARDBs
The UCB would be permitted to and Primary Cooperative Agriculture Join
extend its area of operation to a and Rural Development Banks
maximum of two states in a finan- (PCARDBs), is among the oldest credit Online Certificate Course
cial year, subject to the availabil- institutions in India. on
ity of adequate headroom capital Despite their significant footprint, ca-
required for opening at least five tering to over one crore households, Re-Insurance
branches in each proposed state, SCARDBs are yet to be granted recog- Management
said the draft Master Direction - nition as Credit Institutions under the
Business Authorization for Co-op- CICRA, thereby preventing them from For details please visit
erative Banks (Directions), 2025. becoming members of CICs. www.smartonlinecourse.co.in

16 | 2025 | AUGUST | BANKING FINANCE