Urban cooperative bank
Also called: UCB · Topic: Banking Regulation, NPAs and Financial Stability · NCERT: Beyond NCERT
Meaning
An urban cooperative bank (UCB) is a cooperative society, meaning a member-owned body, that holds a licence to do banking in urban and semi-urban areas. The RBI regulates its banking work. State registrars of cooperative societies handle its registration and administration. This split, called dual control, has left gaps in governance. The Banking Regulation (Amendment) Act 2020 widened the RBI's powers over UCBs. A four-tier regulatory framework followed in 2022, and the NUCFDC umbrella body was set up in 2024.
Example
PMC Bank collapsed in 2019, and New India Co-operative Bank failed in 2025. Both exposed weak governance. After PMC, the DICGC (Amendment) Act 2021 required depositors to get an interim payment within 90 days of the RBI placing restrictions on a bank. The payout is up to Rs 5 lakh per depositor per bank.
Don't confuse with
- Rural cooperatives (StCBs, DCCBs, PACS): they serve rural credit needs. PACS are not covered by DICGC deposit insurance, but UCBs are.
Related concepts
- Scheduled bank
- Public sector bank
- Universal banking
- Narrow banking
- Financial repression
- Islamic banking