Indian Cooperative Banks Seek Lending Expansion for Dairy Sector
The Maharashtra Urban Cooperative Banks Federation has formally petitioned the Indian government to relax existing lending restrictions that affect urban cooperative banks' capacity to finance essential agricultural sectors. The federation aims to enable these banks to extend commercial credit lines to key production installations such as dairy plants, sugar factories, and spinning mills.
During a meeting with Union Home and Cooperation Minister Amit Shah, the federation emphasized the need for urban cooperative banks to finance high-capacity processing nodes. Nipun Kore, representing the federation, highlighted that such financial empowerment could address liquidity deficits within rural cooperative networks. The proposed changes aim to open alternative capital pipelines for processing cooperatives and independent manufacturing plants, facilitating upgrades in storage and pasteurization infrastructure.
The federation also advocated for an immediate relaxation of operational guidelines. They requested a revision of the Reserve Bank of India's capital requirements, which currently mandate a 20 million rupees allocation per branch for new office openings. This requirement has historically hindered the geographical expansion of regional lenders.
To further enhance financial flexibility, the federation proposed a review of provisioning rules established after the merger of PMC Bank with Unity Small Finance Bank. They argued that allowing cooperative banks to unwind dormant asset buffers would optimize liquidity and redirect capital into regional dairy procurement and supply chain expansions.
The regulatory proposals included establishing a study group to resolve legal discrepancies between the federal Banking Regulation Act and the Maharashtra Cooperative Societies Acts. Additionally, they suggested increasing the Prime Minister’s Employment Generation Programme loan ceiling from Rs 50 lakh to Rs 1 crore, intending to lower entry barriers for emerging processing entrepreneurs.
