A.K. Shrivastava
Former General Manager , NABARD
Over a period of time, the cooperative banks have been losing their share in banking business. The absence of competitive technological capabilities has been identified as one of the important weaknesses of the system to cope up with the aspirations of customers. In order to address these challenges, the National Federation of Urban Cooperative Banks took a lead and established National Urban Cooperative Finance and Development Corporation (NUCFDC) Limited in the year 2024, inter-alia, with the objective to accelerate the digitization of member institutions so as to ensure that they are better prepared to navigate the complexities of the digital era effectively. The Corporation also offers other services like legal advisory services.. It has also received regulatory approval to serve as a Self Regulatory Organisation.
Against the above backdrop, the Rural Cooperative Banks were left out to face the challenges of technology upgradation on their own. NABARD has been working with Ministry of Cooperation, GoI towards establishing a Shared Services Entity (SSE) for these banks to harness economies of scale and facilitate their technology upgradation at a faster pace. All these efforts culminated in Reserve Bank of India approving the establishment of Sahakar Sarathi Private Limited (SSPL), a private limited firm in July 2025. The authorized share capital of the company is Rs. 1000 crore which is allocated equally among NABARD, National Cooperative Development Corporation (NCDC) and the Rural Cooperative Banks. NABARD and NCDC have already contributed their share to the company. Since the core activities of NCDC are different, it is expected that NCDC may reduce its shareholding/ role in this entity over a period of time. The Company is likely to engage a consultant for chalking out its operational roadmap.
The Rural Cooperative banks are guided by Reserve Bank of India’s instructions for their investment in private companies. As such, in order to enable the Rural Cooperative Banks to contribute their share capital to this entity, RBI has allowed their investment in the shareholding as a permitted instrument for non-Statutory Liquidity Ratio. RBI has allowed the investment up to 5% of their owned funds, and exempted the same from prudential limit (10% of total deposits) of non- SLR investments and restriction on investment in unlisted non-SLR investments.
The Company is expected to provide the necessary wherewithal to the RCBs in addressing their challenges. However, it may confront issues like receipt of the contribution of share capital expected from State Cooperative Banks as some of them have very weak financial health structure. Further, the existing CBS architecture with the RCBs has many inadequacies and the company may have to take a call for CBS of their own which is not at all an easy proposition. There is also a need for greater coordination with the Federationd of the RCBs to smoothen this process. It may also be necessary to take State Govts onboard in this endeavor so as to secure their wholehearted support for this initiative.
