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A digital footprint for all UCBs – Atul Khirwadkar, NUCFDC

The business plan of NUCFDC is very strong with detailed financial lay out and the process of technology procurement will be transparent:

The National Urban Co-operative Finance and Development Corporation (NUCFDC), the Umbrella Organization (UO) of UCBs in the country, has been set up to act as a catalyst for all urban cooperative banks of the country. NUCFDC is an NBFC that has been formed to provide liquidity and capital support to member cooperative banks. UO is also expected to offer cutting edge technology to its member cooperative banks. Atul Khirwadkar, a very experienced cooperative leader, has been recently appointed as its Chief Executive Officer. Prior to this, Khirwadkar, one of the best-known cooperative commentators of recent times, was MD & CEO of Kalyan Janata Sahakari Bank (KJSB). He has worked for 15 years in public sector banks and 28 years in cooperative banking. Atul Khirwadkar reveals what are the business and technology plans of NUCFDC that are likely to take concrete shape in near future:

Mehul Dani: When is the newly formed National Urban Co-operative Finance and Development Corporation (NUCFDC) likely to become fully functional?

Atul Khirwadkar: NUCFDC has already been registered as a corporate body under Companies Act and has applied for Registration as NBFC ND with Reserve Bank of India. Currently actual capital mobilized is above Rs120 million and commitments to contribute to the equity has been received from 140 UCBs across the country amounting to above Rs1.10 billion. RBI is processing the application and very soon the ‘in-principal’ approval for Certificate of Registration will be received. Post this, NUCFDC expects to mobilize the equity capital.

Along with this, the National Cooperative Development Corporation (NCDC) has assured to grant equity allocation to the extent of Rs2 billion, subject to ceiling of 20% of capital mobilized by NUCFDC. With these processes on going, NUCFDC is planning to start the actual business at least within 12 months’ time. The process will involve the design and SOPs of products and services along with technology support for member banks. Being fully operational with all products on the shop floor, this will probably happen by the end of March 2025.

What is the status of its capital raising plans? How will the funds be utilized for the cooperative banking sector?

As of now UO is organizing various seminars and meetings with the UCBs in various states. Various programs and meetings are an ongoing process. The funds so arranged will be utilized for implementing the following services.

  1. Help the UCBs survive and grow.
  2. Accepting deposits from member banks
  3. Granting refinance to UCBs.
  4. Providing liquidity support to UCBs against collaterals/SLR through repo.
  5. Granting loans to member banks
  6. Providing capital support to member banks.
  7. Creating benign infrastructure for member banks to facilitate sharing of resources to improve cost efficiencies/Data Center/Consultancy Services/ Dedicated IT network with the help of IDBRT/IFTAS and Innovation Hub of RBI.
  8. Fund and treasury management services.
  9. Consultancy in various operational areas.
  10. Capacity building/training / seminars.
  11. HR services, manpower planning, etc.
  12. Research & development.

These services would be commenced after getting license from RBI.

How does the corporation propose the technology to be deployed for the cooperative banks across the country? How will it achieve a cost-benefit advantage for UCBs?

The RBI wants UO to leverage technology to bring them on par with commercial banks. The UCBs are having different CBS softwares. The first focus is to eliminate weakness in regulatory reporting. Secondly, quality MIS generation is the key thing. There are massive plans including offering a unique software platform on SaaS basis with cost effective solutions. Many banks may not think of replacing their existing CBS software. Having said that, UO is currently focussing on locating the solutions to that direction.

Another idea is to bring all UCBs in digital footprint of the country. We will be taking up the matter with RBI for suitable guidance as the current regulations do not permit smaller UCBs to have mobile or internet banking solution due to cyber security weaknesses. Our attempt is to find solutions to these issues.

What are the corporation’s plans to equip the cooperative banks with better corporate governance, compliance, risk management, and auditing practices?

You will find that our bouquet of services includes efforts for ‘Capacity Building’ as also advisory services. Improving governance culture and help UCBs build compliance culture and risk management practices is a key focus area. As far as auditing practices are concerned, every UCB must apply guidelines contained in ‘Presentation and Disclosure’ norms which have been made applicable by RBI’s circular, which is a comprehensive guidance note for UCBs and its auditors. We have been conducting webinars via NAFCUB on these topics and shall continue to do so. The Board of UO meets with high frequency.

Which cooperative banks are likely to get equipped with technology on priority basis?

We must understand that membership of UO or NUCFDC is voluntary. So, it is for the UCBs to take call as to which types of services they want UO to deliver to them. UO can inform them what is in the offering. We would not like to comment on whether they are laggard or not. We surely know that they have core competencies while managing economy within their command area and are indeed doing good job. Few banks may be lagging behind, which may be taken on board – only this is what we can say. There are indeed phase-wise plans submitted to RBI. Suffice to say that UO will attempt to ensure that UCBs hereafter will have a professional body, which will handhold them in case of any difficult situation.

What are the corporation’s business and technology targets for the current FY?

We have submitted detailed business plan and numbers while applying to RBI for Certificate of Registration, which is in the process of evaluation. Unless approved by RBI, it will be difficult to reveal details. Suffice to say, the plan is very strong with detailed financial lay out as the focus is on taking UCBs to next level in all spheres of banking. The process of technology procurement will be transparent.

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