To catalyze ‘inter-cooperative cooperation’ and ensure money from the Urban Cooperative Banking (UCB) sector stays in the sector, the National Urban Cooperative Finance and Development Corporation Ltd (NUCFDC) plans to facilitate buying and selling priority sector loans (PSL). ), and encourage large UCBs to help small and medium enterprises with demat and foreign exchange services, among others.

The NUCFDC received the certificate of registration from the RBI in February 2024 and was inaugurated by Home Minister and Cooperation Minister Amit Shah in New Delhi on March 2. It will provide loans, refinancing facilities and liquidity support, among others, to UCBs.

Prabhat Chaturvedi, CEO, highlighted that NUCFDC will provide various fund-based and non-fund-based services to its member UCBs and ensure that industry money stays in the sector.

The company, which plans to apply to the RBI for recognition as a self-regulatory organization (SRO) for UCBs, will also work to generate business opportunities for member UCBs.

“We will facilitate the buying and selling of PSL loans (priority sector loans) within the UCB space. They may need help buying/selling a specific pool of loans,” Chaturvedi said.

PSL includes loans provided by banks to sectors such as agriculture, MSMEs, export credit, education, housing, social infrastructure and renewable energy.

Additionally, large UCBs can benefit from enhanced business opportunities. These banks can offer many facilities to small and medium-sized OCBs.

“So instead of small and medium sized CBOs depending on the private sector and other banks for services like paperless accounts, foreign exchange, etc., large UCBs can provide the same to them,” he declared.

Fund and non-fund activities

Chaturvedi observed that as far as funds are concerned, NUCFDC can accept deposits from UCBs, extend loans to them, offer refinancing and increase their capital (by subscribing to their NCD and Tier-II issues) and manage their operations cash flow.

“On the non-fund side, we can improve their technology architecture and technology stack…mid-sized and small UCBs don’t have IT staff. They can’t afford to attract specialist talent to where they are,” he said.

Thus, the company, in its capacity as a non-bank financial company, can create a talent pool of banking IT specialists.

“We can attract talent. And the services of our banking IT specialists can be made available to these banks at a fractional cost and on a sharing and pay-as-you-go basis.

“Non-fund based activities will also include IT, training and capacity building initiatives, creation of shared services (for functions that can be outsourced) for finance and accounting, human resources, etc., through a centralized unit,” Chaturvedi said.

Additionally, the company will support UCBs with services such as cybersecurity, data recovery, backup and resilience.

“So we can create a reliable infrastructure on a public cloud or on our own cloud, where we can host the data of these banks and provide them with resilience as a service or disaster recovery backup,” said the head of the NUCFDC.