Gujarat UCBs exhibits Robust NPA control compared to National Peers: Jyotindra Mehta, Chairman of NUCFDC, Umbrella Organization for UCBs

The Urban Co-operative Banks (UCBs) of Gujarat are demonstrating impressive performance, boasting a low NPA ratio of just 0.5%, well below the national average of 3.8%.

Jyotindra Mehta, Chairman of NUCFDC, Umbrella Organization for UCBs highlighted at the inaugural panel of Sahakar Setu - The West India Urban Co-operative Banking Summit 2024. This trend indicates a strong financial outlook for the state’s UCB ecosystem.

During the one-day summit held at The Leela, Gandhinagar, industry leaders also echoed the importance of digital agility. Industry leaders participated in various symposiums, highlighted that the robust customer centricity, a commitment to reaching last-mile audiences with customized solutions, and adaptability to governance and regulatory standards are paving the way for UCBs to carve out a significant niche within the broader banking system.

Speaking at the inaugural session, Shri. Bhupendra Patel, Hon’ble Chief Minister, Government of Gujarat expressed a clear view that today is the golden time for co-operative banking sector to flourish through transparent management and technological innovation.

He said that, “with the inspiration of Prime Minister Narendra Modi Ji and under the leadership of the first Cooperative Minister of the country, Amitbhai Shah, successful and fruitful efforts have been undertaken for the sustainable growth of the cooperative banking sector. The mantra of 'cooperative prosperity' has been realized in every sector. Prime Minister has adopted a strategy of technology transformation and transparency in every sector for economic and social upliftment of common man in developed India@2047. The duo of Mr. Narendrabhai-Amitbhai has revolutionized Gujarat's cooperative sector in two decades and moved it two steps ahead of time, not with time. The time limit has been extended to achieve the Priority Sector Lending targets of the Urban Co-operative Banks. Co-operative Minister Shri Amitbhai is working to provide IT infrastructure and operational support to approximately 1,500 urban cooperative banks in the country”.

“The role of the National Urban Co-operative Finance and Development Corporation (NUCFDC) as an umbrella organization for the development of the urban cooperative banking sector. The cooperative banks, which follow specific criteria while providing loans, are now achieving significant progress and double profits due to their low NPAs. This is a matter of pride for us”, he added further.

Regarding the achievements of Gujarat in the urban cooperative sector, Cooperation Minister, Jagdish Vishwakarma stated that, “the shift from mass production to production by the masses has become a distinctive identity for milk production and the cooperative sector in Gujarat. Daily payments of over ₹150 crore are made to the state’s milk producers through DBT. The network of co-operative banks in Gujarat is extensive, and the urban banks in the state are financially more stable compared to those in other states. In Gujarat, 211 urban co-operative banks operate 1,138 branches, with approximately ₹84,531 crore in deposits and ₹52,333 crore in loans, yielding an estimated profit of ₹1,300 crore.”

Speaking about the services provided to citizens by urban co-operative banks, Minister Vishwakarma mentioned that “technologically equipped urban co-operative banks offer various services such as mobile banking, UPI transactions, and net banking.

He noted that the dairy producer-cooperative sector has made significant contributions to making India the world's fifth-largest economy.

We aim to strengthen the cooperative sector to double farmers’ incomes and elevate India's economy to five trillion, turning it into a developed nation”.

Organized by the National Urban Co-operative Finance and Development Corporation (NUCFDC) and the Gujarat Urban Cooperative Banks Federation (GUCBF), the one-day summit brought together policymakers, regulators, and industry leaders from the Urban Co-operative Banking sector.

The event saw a massive participation of 500+ guests and key dignitaries like Smt. Scenta Joy, Chief General Manager, Reserve Bank of India and Shri Laxmi Dass, President, National Federation of Urban Cooperative Banks and Credit Societies Ltd. (NAFCUB) along with UCBs leaders.

Digital transformation is fundamentally reshaping the Indian financial landscape, including its ancillary sectors.

The summit, themed "Technology for Transparency and Transformative Growth," focused on the vital role of technology in enhancing transparency and fostering sustainable growth within UCBs.

Shri. Jyotindra Mehta, Chairman of NUCFDC and GUJCBF, while speaking at the session on Responsible Banking for Sustained Growth and Development said, “India is home to over about 1500 UCBs, with around 218 located in Gujarat. More than 60% of these banks are small, each holding deposits of less than INR 50 crore, and some function solely as Unit UCBs. While Gujarat, Maharashtra, Karnataka, and Andhra Pradesh lead geographically in UCB distribution, even remote regions like Nagaland and Imphal have their own banks. With a history spanning over a century, and some established for more than 100 years, the sector faces significant challenges in technology adaptation. Recognizing this barrier, NUCFDC is actively working to provide affordable technology solutions, aiming to create a thriving ecosystem that sets a benchmark for the next century.”

During the event, talking about Umbrella organization, Prabhat Chaturvedi, CEO, NUCFDC emphasized on the importance of enhancing the technology stack, compliance, governance standards, efficiency, and profitability of UCBs. 

He said, “It is possible to replicate best practices across the sector. This will enable us to offer robust, scalable, cost-effective, and cyber-resilient IT infrastructure that meets regulatory guidelines and is future-ready with digital products and services to fulfill customer expectations and drive business growth. NUCFDC is actively developing shared and centralized services in key areas such as IT hardware and software solutions, IT governance and compliance, training, cybersecurity solutions, and advisory services. These initiatives will alleviate the burden of IT infrastructure for UCBs and provide them with centralized IT services.”

Prbhat Chaturvedi highlighted that currently advising a Mumbai-based Tier-3 UCB on two critical areas i.e. upgrading its Core Banking System and facilitating the bulk procurement of PCs for its branches and offices.

The UO is in advanced stage of finalizing a pilot program for an Audit Software with two UCBs, which will be offered on a subscription basis.

This model allows UCBs to access the software without the need for hardware investments or maintenance costs.