Hope to register all urban cooperative banks with umbrella body in current financial year: NUCFDC CEO

National Urban Cooperative Finance and Development Corporation (NUCFDC), the umbrella body for urban cooperative banks is hopeful that all UCBs will register on the platform within the current financial year ending March 2027, its CEO Prabhat Chaturvedi said.

NUCFDC was set up with the purpose of connecting the 1,400-odd UCBs, enhance synergies and provide economies of scale and competitiveness by providing modern IT platforms and services at affordable costs.

"What we bring is the economies of scale. When we build for 500, 700, 800 small banks, the economies of scale will result in reduction in pricing, which has already happened in a few products, like cyber insurance, where we have been able to bring down the premium that even our largest bank in the sector pays," Chaturvedi told Business Today on August 8.

He was speaking on the sidelines of an event in Mumbai, where Union Home and Cooperation Minister Amit Shah inaugurated a new office of NUCFDC and also announced several new product launches under the umbrella organisation.

Some of the products are related to core banking offerings and cyber security, which will be offered through the umbrella body, that otherwise many small UCBs may not have been able to afford on their own.

"The idea was to have a central platform where you have core banking, payments, all the compliance. Whatever you need to run a bank should be available in a box, plug and play, at a pay as you go pricing," said Chaturvedi.

Banks then don't have to invest in anything, don't have to deal with multiple vendors, different API integrations or even multiple litigation, he said. He pointed that many times even the legal agreements banks entered into vendors were not proper and a bank's interest was not protected. Working through the umbrella body, would eliminate that.

The services that NUCFDC offers are to UCBs that are it's registered members.

Close to half of the 1,400 UCBs are still not registered with NUCFDC and Chaturvedi hopes to get all of them on board in the current financial year.

How will it do that? 

Earlier, UCBs needed to contribute 0.15 per cent of their deposits as capital to meet RBI's 300 crore mandatory equity capital requirement for NUCFDC. The minimum monetary requirement has been removed now so that even smaller UCBs can afford it to join the umbrella body.

"Smallest of the banks don't have that kind of money to buy everything on their own. They need rental kind of pricing, which makes it affordable for them," Chaturvedi said.

NUCFDC is negotiating with vendors at scale, customising it to the sector's requirement and as the bank starts availing a particular service, the vendor starts charging, he explained. The payment goes directly to the vendor, with a small markup for NUCFDC's services. Any profit earned by NUCFDC goes back to UCBs as they are shareholders.