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Comprehensive Digitization Initiative for Cooperative Banks Unveiled by Amit Shah

In a written reply to a question in the Lok Sabha, Shri Amit Shah announced a significant push towards the modernization and digitization of cooperative banks across India. This extensive effort encompasses Urban Cooperative Banks (UCBs), Umbrella Organizations, Agriculture and Rural Development Banks (ARDBs), District Central Cooperative Banks (DCCBs), State Cooperative Banks (SCBs), and Primary Agricultural Credit Societies (PACS). 

Core Banking Solution Mandate 

Shah highlighted that the Reserve Bank of India (RBI) has mandated all cooperative banks to adopt the Core Banking Solution (CBS). This move aims to streamline operations and enhance the efficiency of these financial institutions, marking a significant step towards modernization. 

Formation of NUCFDC 

For Urban Cooperative Banks (UCBs), the RBI has approved the establishment of the National Urban Co-operative Finance and Development Corporation (NUCFDC), a national-level Umbrella Organization. NUCFDC, which received its Certificate of Registration (CoR) from the RBI on February 8, 2024, will function as a Non-Banking Financial Institution (NBFI). Its mission is to bolster UCBs’ operational efficiency by providing state-of-the-art IT solutions, conducting technological reviews, fostering collaboration, and promoting innovation. The organization aims to reach a paid-up capital of Rs 300 crore to function as a self-regulatory organization under the RBI, with the National Cooperative Development Corporation (NCDC) committing to contribute 20% of this amount. 

NABARD’s Role in Enhancing IT Infrastructure 

The National Bank for Agriculture and Rural Development (NABARD), which oversees Rural Cooperative Banks (RCBs), is actively working to enhance their IT infrastructure. In collaboration with the Ministry of Cooperation and the RBI, NABARD has proposed the formation of a Shared Services Entity (SSE) to provide digital services to RCBs, ensuring they are well-equipped for digital transformation. 

Computerization of PACS 

The Government of India has sanctioned a project for the computerization of functional Primary Agricultural Credit Societies (PACS) with a total financial outlay of Rs 2,516 crore. This initiative aims to bring all functional PACS across the country onto a unified ERP-based national software, integrating them with NABARD through State Cooperative Banks (StCBs) and District Central Cooperative Banks (DCCBs). Approximately Rs 794 crore has already been disbursed for the project. 

Digitization of ARDBs 

Further, the government has approved the computerization of Agriculture and Rural Development Banks (ARDBs) across 13 states and union territories to strengthen the long-term cooperative credit structure. For the fiscal years 2023-24 and 2024-25, the Government of India released Rs 4.26 crore to eight states and union territories for hardware procurement, digitization efforts, and support system establishment. 

Shri Amit Shah’s announcement marks a comprehensive effort to modernize the cooperative banking sector, ensuring these institutions are well-prepared to navigate the complexities of the digital era. 

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