RBI set to restart urban co-op bank licenses after 22-year freeze

The Reserve Bank of India has signalled a shift in policy on urban co-operative banks, indicating plans to resume issuing new licenses after more than two decades. The RBI had stopped granting licenses in 2001 following a series of failures in the sector that eroded confidence among depositors and regulators.

The proposed framework comes with stringent guardrails. New applicants would need to demonstrate financial strength and governance capabilities, with the RBI suggesting a minimum capital requirement of ₹300 crore for established, well-governed societies seeking to convert or launch as banks.