A discussion paper on Licensing of UCBs was published for stakeholder feedback on 13 January 2026, following a two decade pause on issuance of fresh licenses. On an analysis of the feedback, it has been decided to resume licensing of UCBs on ‘on tap’ basis. The draft guidelines will be issued shortly for stakeholder consultation, RBI said in a statement.
“In light of the experience gained and the developments since 2008 when the Credit Monitoring Arrangement for Rural Cooperative Banks was last revised, we are issuing draft directions after undertaking a comprehensive review of the arrangement,” Malhotra said.
“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 the instructions, keeping in view the objectives of developing a vibrant co-operative sector while addressing the prudential concerns arising from concentrated lending. Draft Amendment Directions in this regard are being issued for wider stakeholder consultations,” RBI said in a statement.
The two measures proposed are aimed to further strengthen the cooperative sector, Malhotra said.
He also announced proposal to harmonise and standardise the regulatory framework on interest rates on advances for all regulated entities, in order to enhance transparency in lending rates and strengthen consumer protection.
The Reserve Bank proposes to rationalise the regulatory framework on interest rates for all Regulated Entities (REs) on a principle-based basis.
The proposed rationalisation aims to harmonise the guidelines across REs while maintaining proportionality, it said in a statement.
The proposed measure aims to address certain operational aspects of the current framework on Marginal Cost of Funds based Lending Rate (MCLR) and External Benchmark Lending Rate (EBLR).
It also aims to standardise certain divergent market practices concerning interest charging, including day count convention and benchmark reset dates.
The measures seek to ensure uniformity, enhance transparency in loan pricing, strengthen monetary transmission and bolster consumer protection. Draft directions incorporating these proposals will be issued shortly for public comments, RBI said.