In a compelling address at the College of Agricultural Banking (CAB) in Pune, Reserve Bank of India (RBI) Deputy Governor Shri Swaminathan J urged directors of Urban Cooperative Banks (UCBs) to prioritize robust governance, effective risk management, and responsible technology adoption to safeguard depositor trust and ensure long-term resilience. Delivered on July 11, 2025, during a seminar themed ‘Resilient Cooperatives for the Future: Enhancing Governance in a Digital Age,’ the speech highlighted UCBs’ pivotal role in India’s financial ecosystem amid the United Nations’ designation of 2025 as the International Year of Cooperatives.
Shri Swaminathan emphasized the unique dual identity of UCBs as community-rooted cooperatives and regulated banking entities. “UCBs have long exemplified grassroots financial engagement, serving small traders, self-employed individuals and the informal sector with personalized services built on local relationships,” he noted. However, he stressed that this identity carries significant responsibilities, as banking fundamentally relies on depositor trust, which must be earned through prudent operations and accountability.
The Deputy Governor outlined five critical imperatives for UCB directors to strengthen their institutions:
- Strengthening Governance and Accountability: He called for active, independent board oversight, urging directors to engage deeply in decision-making, ensure arm’s-length dealings, and prioritize transparency in related-party transactions. “Strong governance begins with informed boards that place depositors’ interests above all,” Shri Swaminathan said.
- Building Robust Assurance Functions: Highlighting the need for independent risk management, internal audit, and compliance teams, he advised boards to grant these functions autonomy and direct access to leadership. “These are your eyes and ears engage with them to identify risks early and act decisively,” he advised.
- Engaging Constructively with Auditors and Inspectors: Shri Swaminathan encouraged viewing auditors and RBI inspectors as partners, not adversaries. “Their insights are tools for improvement; discuss reports thoroughly and implement time-bound corrections,” he emphasized.
- Embracing Technology with Responsibility: Acknowledging the shift toward digital banking, he cautioned against hasty adoption without secure foundations. “Cybersecurity is a governance issue align digital expansions with your bank’s risk appetite and invest in systems to protect customers from fraud and disruptions,” he stated.
- Leveraging the Umbrella Organization for Collective Strength: He praised the National Urban Cooperative Finance and Development Corporation (NUCFDC) as a shared platform for technology, capacity building and funding support. “Unity has always been the strength of cooperatives; NUCFDC offers economies of scale to help smaller UCBs compete in a tech-driven world,” Shri Swaminathan added.
The address also recognized recent RBI and government initiatives to bolster the sector, including a four-tiered regulatory framework, revised priority sector lending guidelines, and the establishment of NUCFDC based on expert recommendations. “While regulators can enable progress, lasting resilience must come from within through professional management and a commitment to ethical practices,” he concluded.
Shri Swaminathan reaffirmed the RBI’s role as both regulator and partner, committing to support UCBs in navigating challenges. “Urban Cooperative Banks matter not just for profit, but for purpose. Let us work together to build a vibrant, resilient sector,” he said, ending with a call to action: “Jai Hind.”
This seminar, organized by CAB, aligns with global recognition of cooperatives’ contributions to inclusive development, as seen in India’s iconic models like Amul and SEWA. As UCBs evolve in a digital era, Shri Swaminathan’s guidance underscores the need for visionary leadership to maintain their relevance and stability.
