Sahkar Sarathi : A Chariot for Future Ready Rural Financial Cooperatives.

The Rural Financial Cooperatives had lagged behind in computerisation of their operational processes and procedural systems. The commercial banks adopted information technology from the later half of 1990s and moved fast in extending the technology to all aspects of their functioning; today they are able to compete with any world class bank in IT-enabled operations. RBI encouraged emergence of various technology based financial institutions for providing all kinds of the financial services and these institutions have emerged as a strong competitor to the rural financial cooperatives in the agricultural and rural finance sector far and wide across the country. These cooperatives had a lack of inclination, lack of financial resources and, consequently, the lack of action for adoption of the computer-based technology despite the fact that the spread of information technology and tech-based financial services had spread fast in even the far-flung rural areas and, as per a recent study, around 84% percent of the rural youth are using smartphones that are enabled for the financial transactions also.

Reserve Bank of India and NABARD kept on encouraging the rural financial cooperatives for adoption of technology in their day-to-day operations on the lines of those of other tech-savvy financial institutions. A substantial amount of technical and financial assistance was provided to these cooperatives by them under the Financial Inclusion Technology Fund. Yet, the rural financial cooperatives remained, largely, at the basic level of computerisation under the Core Baking Solutions platform. A host of factors can be counted for this situation and the externalisation of such factors is a common attitude in the rural financial cooperatives. Yet, the smaller size is the factor constraining setting up of independent system that involves a substantially high capital cost and recurring operational cost despite subsidisation by the government sources.

Now, an important initiative has been taken by NABARD in association with the Ministry of Cooperation in GoI by way of setting up of a Shared Services Entity, under the title of Sahkar Sarathi Private Limited (SSPL), to provide essential IT infrastructure and services to the rural financial cooperatives as a part of the broader effort to modernize their banking services in rural areas and enabling them to compete effectively with other financial institutions. Initially, Sahkar Sarathi will focus on a centralised digital infrastructure providing a range of robust banking software applications for day-to-day banking operations, managing cyber-security tools to ensure secure transactions and protecting the sensitive data of the rural financial cooperatives and facilitating modern payment solutions by integrating payment systems of all the participating rural financial cooperatives. . This will enable these institutions to leverage technology for providing better banking services to the customers at affordable costs and to compete effectively with other institutional players in the rural financial market through the modern, scalable and secure IT infrastructure. The role expected from Sahkar Sarathi would also lead to greater transparency, operational efficiency and regulatory compliance at a higher common platform. The infrastructure so created would also enable integrated services at the counter of Primary Agricultural Cooperative Societies (PACS), District Central Cooperative Banks(DCCBs) and the State Cooperative Banks(StCBs). In due course of time, it may also establish integration with National Cooperative Bank of India as conceived in the New National Policy on Cooperation enunciated by the Ministry of Cooperation in GoI.

SSPL is, thus, expected to play a transformative role in enhancing the operational efficiency and promoting a wider digital adoption by the rural financial cooperatives as much as their customers who are largely the small and marginal farmers and the people of limited means in rural areas. Thus, further impetus and a push would be provided to the process of financial inclusion through the digital platforms. Even though the objective of SSPL is to provide the technology-based services by the rural financial cooperatives equivalent to that available to the customers of commercial banks and other financial entities, the SSPL infrastructure would have to be appropriately simplified but secure enough that may be amenable to the clientele that the rural financial cooperatives cater to in a large proportion.
Sahkar Sarathi has received an in-principle approval of RBI for being set up as a non-banking financial institution with an authorised share capital of Rs 1000 crore, to be contributed equally by National Bank for Rural Development (NABARD), National Cooperative Development Corporation (NCDC) and the participating Rural Cooperative Banks (on a voluntary basis). Thus, a sense of ownership is inducted in the rural financial cooperatives who will be benefitted from this initiative, as also other major stakeholders.

Now, on 26 September 2025, RBI has issued its Directions that allow the rural cooperative banks to invest in the share capital of SSPL as a part of their Non-SLR investments. These investments shall be restricted to a limit of 5% of the own funds (Paid-up Share Capital and Reserves) of the contributing StCB / DCCB. Further, these investments shall be exempt from the prudential limit prescribed by RBI for the Non-SLR Investments of these banks as also the restrictions placed on the un-listed Non-SLR Investments. Thus, the investment by the StCBs / DCCBs in the share capital of SSPL is an approved head of Non-SLR investments and it is over and above the approved prudential limit of Non-SLR investments and, again, it is over and above the approved prudential limit of Non-SLR investments in unlisted instruments with the only condition that such investments shall not exceed 5% of the owned funds of the investing StCB / DCCB. These Directions suitably amend the earlier Directions issued by RBI on 14 July 2016 on Investment in Non-SLR Instruments by the StCBs and DCCBs that define the prudential limits, the type of instruments and the prudential restrictions on their Non-SLR investments. Thus, the recent Directions of RBI enable the StCBs / DCCBs to invest in the share capital of the Shared Service Entity ie. SSPL on a voluntary basis. Thus, even though the StCBs and DCCBs may invest in the share capital of SSPL, it is voluntary and the share in ownership thereof is not a pre-condition for the StCBs and DCCBs to participate in the centralised digital infrastructure platform of SSPL and get benefitted for the comparatively low fee-based services.
It would be concluded that Sahkar Sarathi is a very important initiative for making the rural financial cooperatives the ‘Future Ready’ institutions with a robust and centralised digitalised services infrastructure at affordable costs by the rural financial cooperatives with a limited financial resource and operational capability to establish an all-pervasive modern digital platform on its own. The rural financial cooperatives should come forward without any delay to seek their administrative approvals for participating in this process of strengthening them.