The Reserve Bank of India said on Tuesday that loans given by banks to the National Cooperative Development Corporation will be counted as priority sector lending if they are sanctioned on or after January 19, 2026.
These loans will be used by NCDC to provide funds to cooperative societies. The benefit will apply to banks other than Regional Rural Banks, Urban Cooperative Banks, Small Finance Banks and Local Area Banks.
According to the RBI, the loans must be used for activities listed under the Master Direction on Priority Sector Lending, 2025.
Meanwhile, the PM Modi-led Central government and the central bank have also taken several steps to strengthen cooperative banks. These measures focus on improving their financial position, governance, digital services and customer protection.
Among the steps taken:
- Urban Cooperative Banks have been allowed to open new branches
- The limit on housing loans for Urban Cooperative Banks has been increased from 10 per cent to 25 per cent of their total loans and advances
- The Banking Regulation Act has been amended to increase the tenure of directors of cooperative banks from eight years to ten years
- Fees for onboarding cooperative banks to the Aadhaar-enabled Payment System (AePS) have been reduced
- The National Urban Co-operative Finance and Development Corporation Limited (NUCFDC) has been set up to provide IT and operational support to Urban Cooperative Banks
- A Shared Services Entity, Sahakar Sarthi, has been created to provide technology services to rural cooperative banks
- Rural cooperative banks have been included under the RBI’s Integrated Ombudsman Scheme for better grievance redressal
Moreover, deposits in cooperative banks continue to be insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to ₹5 lakh per depositor per bank, including interest.NCDC is a statutory body under the administrative control of the Ministry of Cooperation. It provides financial support to cooperative institutions and helps in the growth of the cooperative sector across the country.
