The new guidelines will also include a provision under which well-managed cooperative credit societies can turn into co-operative banks, Karuppasamy said. “Well-managed credit societies and financially sound credit societies will be converted into co-operative banks provided they satisfy certain norms on capital adequacy, NPAs, etc.,” he said.

The Reserve Bank said the minimum capital requirements for setting up cooperative banks will soon be hiked to as much as Rs 3 crore from Rs 15 lakh at present. “Depending on the location and area, we are coming up (with the guidelines for cooperative banks). There will be liberal norms for setting up a bank in backward areas and slightly tougher norms in the banked areas,” RBI executive director S Karuppasamy told reporters in Mumbai on the sidelines of an event organised by Greater Bombay Cooperative Bank. He said under the existing norms, a cooperative bank can be set up with a minimum capital of Rs 15 lakh, which will now be increased to Rs 50 lakh for banks in the backward areas and Rs 3 crore for urban areas which already have banking infrastructure.

Asked about the timeline for the new guidelines, Karuppasamy said, “We are in the final stage... will come out with it shortly.” Co-operative banks have a strong presence in Maharashtra, which is home to the biggest of the banks in the sector, while other states such as TN, Karnataka and Gujarat also have strong co-operative banking sector.

The new guidelines will also include a provision under which well-managed cooperative credit societies can turn into co-operative banks, Karuppasamy said. “Well-managed credit societies and financially sound credit societies will be converted into co-operative banks provided they satisfy certain norms on capital adequacy, NPAs, etc.,” he said.