RBI to soon launch draft guidelines on on-tap licences for urban cooperative banks: Malhotra

New Delhi: The Reserve Bank of India (RBI) will soon come out with draft guidelines for 'on-tap' licensing for urban cooperative banks, Governor Sanjay Malhotra said on Wednesday.

The central bank had earlier decided to lift the over two-decade-old pause on fresh licences to urban cooperative banks and resume the 'on-tap' basis licensing, just as it does for universal banks.

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Malhotra said it had launched a discussion paper on the move in January this year, and will be following up with the next steps shortly.

"The draft guidelines will be issued shortly for stakeholder consultation," the Governor said, in the statement on development and regulatory policies, announced alongside the third bi-monthly monetary policy review of FY27.

Risks around governance in the urban cooperative banks that are controlled or dominated by political leaders, and which had been leading to episodic stress at such lenders, was presumed to be one of the reasons for the freeze on new licences for UCBs.

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Meanwhile, Malhotra also announced a review of guidelines on concentration risk management for Rural Co-operative Banks on Wednesday.

He said the Credit Monitoring Arrangement (CMA) instructions issued in 2008 govern the norms.

"As the banking sector in general, and co-operative banking sector in particular, have undergone significant expansion and changes since then, it has been decided to review these instructions, keeping in view the objectives of developing a vibrant co-operative sector," he said.

Prudential concerns arising from concentrated lending will be taken on board in the draft amendment directions which are being issued for wider stakeholder consultations, the Governor assured.

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