RBI Governor Calls for Strong Governance in Urban Co-operative Banks
Reserve Bank of India Governor Sanjay Malhotra addressed urban co-operative banks on Monday. He stressed the need for high standards in oversight and risk management. The meeting took place in Mumbai with top executives from select banks.
Focus on Stability and Credibility
Malhotra stated that strong governance forms the foundation for stability in the cooperative banking sector. He urged banks to maintain strict underwriting discipline. Asset quality management must remain a top priority.
"These practices are crucial for financial soundness," Malhotra said. "They also help preserve depositor confidence."
Role in Financial Inclusion
The governor highlighted the continued relevance of urban co-operative banks. He noted their importance in credit delivery to underserved areas. These banks serve small borrowers and local businesses effectively.
Malhotra pointed out that many communities rely on these banks. Large commercial banks often cannot reach these areas. The sector remains a vital pillar of India's formal financial system.
Policy Initiatives and Reforms
Malhotra referenced various policy measures introduced by the RBI since March 2025. He expressed confidence that these initiatives would enable healthy growth. Regulatory reforms aim to improve long-term viability.
The governor did not detail specific steps. However, he indicated that supervisory actions focus on resilience. The RBI wants the sector to grow sustainably.
Emphasis on Risk Controls
A significant portion of the address covered governance and risk management. Malhotra underscored several key areas:
- Robust underwriting practices
- Diligent monitoring of asset quality
- Effective internal controls
These elements are essential for maintaining financial health. They protect both the banks and their depositors.
Customer-Centric Approach
Beyond financial metrics, Malhotra emphasized ethical practices. He called for timely grievance redressal and transparency. Customer trust is central to the sector's relevance.
"Adhering to ethical standards builds lasting relationships," he noted. "This trust drives growth and sustainability."
Meeting Participants and Discussions
The meeting included RBI Deputy Governors Swaminathan J. and S.C. Murmu. Senior RBI officials also attended. Representatives from national cooperative organizations were present.
During interactive sessions, participants shared feedback on policy issues. They discussed operational challenges facing the sector. This dialogue reflects ongoing engagement between regulators and banks.
The previous such interaction occurred on March 19, 2025. These regular meetings help address sector-specific concerns. They foster collaboration between the RBI and cooperative banks.
