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हिन्दी — Read in HindiBanks: regulation, bad loans and reform
How banks are regulated and kept sound: licences, capital, credit, bad loans and reform.
Credit to deposit ratio and low cost deposits
Copy link to Credit to deposit ratio and low cost depositsMains
The credit to deposit ratio is the share of deposits that banks have lent out, and current and savings account (CASA) deposits are their cheapest source of funds.
What changed
5 Jul 2026Briefnewly addedThe banking system's credit to deposit ratio reached 82.5% by 15 June 2026, against about 75% a year earlier. The share of CASA deposits fell to about 39%, so banks are funding loans with costlier term deposits. Mains: Funding loans with costlier term deposits slows the transmission of rate cuts to borrowers. The Indian Express, 5 Jul 2026
Licensing of urban cooperative banks
Copy link to Licensing of urban cooperative banksPrelims and Mains
Urban cooperative banks (UCBs) are cooperative banks in towns and cities, long under the dual control of the Reserve Bank of India (RBI) and State registrars of cooperative societies.
- New UCB licences were stopped in 2004 after a wave of failures exposed weak governance and dual control.
- The Banking Regulation (Amendment) Act, 2020 brought UCBs more firmly under RBI supervision.
What changed
5 Aug 2026newly added
- At its August policy, the RBI said it would resume licensing of UCBs "on tap", that is, open all year rather than in fixed windows, after about two decades.
- The RBI judged the sector ready for fresh entry under its stronger supervision since 2020, and draft guidelines are to follow.
- The RBI will also review concentration risk norms for rural cooperative banks, last revised in 2008.
Mains: Reopening entry tests whether the RBI's stronger supervision since 2020 has cured the governance failures that closed licensing in 2004.
Reserve Bank of India, 5 Aug 2026: Statement on Developmental and Regulatory Policies (opens in a new tab) · The Hindu, 5 Aug 2026: Sensex gains as RBI keeps policy rates unchanged (opens in a new tab)
28 Jul 2026Briefnewly addedThe Ministry of Cooperation urged the RBI to frame a licensing policy for new UCBs. The RBI's January 2026 discussion paper had proposed a ₹300 crore capital floor, ten years of operations and net bad loans below 3 per cent for applicants. The Indian Express, 28 Jul 2026
See also: The Reserve Bank of India and multi State cooperative banks