How does NUCFDC support financial inclusion through UCB modernization?
NUCFDC’s fundamental purpose is to make Urban Cooperative Banks future-ready while preserving their community-first mission. Under the Digital Sahakar Umbrella Framework, the organisation is modernising UCBs through a three-pronged approach.
Technology standardisation: Every UCB should have access to national and global-level banking technology so that their customers experience the same service quality offered by any other category of bank. NUCFDC has already begun rolling out key products, with major solutions such as CBS, LOS and SOC scheduled for deployment in the coming months.
Cost efficiency: By negotiating collectively and sharing resources, UCBs benefit from economies of scale. This reduces their technology expenditure and allows them to focus on customer-centric growth instead of backend IT challenges.
Access to innovation: Services that were once exclusive to large banks, digital lending, multilingual banking, and AI/ML-based applications, will soon be available to UCBs through shared platforms, making high-end innovation both accessible and affordable.
In addition to technology, NUCFDC will extend Fund-Based Services such as capital augmentation, loans, refinance and liquidity support to drive UCB growth. As a result, UCBs will not be left behind; instead, they will emerge as a strong pillar of India’s financial inclusion landscape.
What risk management frameworks are NUCFDC promoting across UCBs?
NUCFDC is introducing multiple frameworks and governance practices to strengthen risk management across UCBs. The major initiatives include:
Risk-based Internal Audit aligned to international standards: NUCFDC is helping UCBs adopt global internal audit norms (IIA, BCBS etc.). This shifts audits away from simple compliance checklists towards genuine risk-based evaluation. Training is being provided to auditors and senior management to improve internal controls and audit quality.
Stronger internal controls and governance: The emphasis is on building transparent internal control systems and governance mechanisms that promote depositor trust and institutional resilience.
Digital and technological risk safeguards: Standardisation of Core Banking Software, improvements in cybersecurity, vendor management, and technology consulting help UCBs reduce technology infrastructure risk and strengthen digital reliability.
Compliance monitoring and regulatory/legal risk support: Through Compliance Monitoring-as-a-Service and legal advisory, UCBs receive guidance to meet regulatory norms and avoid penalties or closure due to non-compliance.
What challenges arise in digitizing legacy banking systems in UCBs and how will NUCFDC help address them?
One of the toughest challenges for UCBs is the patchwork of outdated systems they currently operate on. While some vendors offer reliable platforms, many lack proper SLAs, resulting in inconsistent support and higher operational risk. Smaller UCBs often struggle to meet even basic RBI cybersecurity requirements and cannot afford advanced fraud monitoring, analytics or 24×7 digital banking tools.
NUCFDC is addressing these challenges by establishing a Centralised Shared Technology Infrastructure that provides every UCB, irrespective of size, with an RBI-compliant, cyber-resilient and affordable technology stack. This simplifies modernisation and ensures equal access to secure, high-quality digital banking.
What compliance culture changes does NUCFDC advocate for UCB boards?
NUCFDC is encouraging a significant cultural shift within UCB boards, emphasising leadership accountability and governance maturity.
Key cultural shifts encouraged by NUCFDC include:
1. “Tone at the Top” and leadership accountability
- Boards and senior management must visibly own governance, audit and compliance responsibilities.
- Through partnerships like IIA India, NUCFDC conducts “Tone at the Top” briefings to instil transparency, integrity and risk awareness.
- Training programmes such as Sahakar PaathShaala ensure that Chairmen, Directors and CEOs participate in sessions on compliance, fraud risk and KYC.
2. Proactive governance and oversight
- Boards are urged to move from reactive crisis management to proactive monitoring.
- This includes reviewing audit and risk reports, compliance dashboards, policy updates and annual risk assessments.
3. Capacity building and continuous learning
- Boards are encouraged to build capability through training programmes, webinars and online learning systems.
- Exposure is provided to newer risk areas such as cybersecurity, ESG, AI and fraud prevention.
4. Transparency, reporting and compliance visibility
- Emphasis on independent compliance functions, proper reporting lines and empowered Chief Compliance Officers.
- Centralised services such as compliance monitoring, cybersecurity oversight and legal advisory ensure uniformity across smaller UCBs.
5. Risk-mitigation mindset and early issue detection
- Emphasis on RBIA, routine compliance risk assessments and proactive fraud monitoring.
- Greater focus on digital, IT, vendor and cyber risks.
6. Zero tolerance for non-compliance
- NUCFDC advocates for timely corrective or disciplinary action to maintain accountability.
- Boards must drive continuous improvement to avoid closures due to compliance or technology failures.
7. Use of technology for compliance
- Boards are encouraged to invest in digital tools such as dashboards, standardised CBS, cybersecurity solutions and monitoring tools.
- Shared vCISO services and legal advisory support help smaller banks stay compliant.
8. Member/depositor trust orientation
- Compliance is positioned not as a burden but as a trust-building exercise requiring transparency, ethical conduct and customer fairness.
What cost efficiencies and compliance advantages does the shared ‘SahakarBox’ cybersecurity and disaster recovery solution offer to smaller UCBs?
For smaller UCBs, cybersecurity and disaster recovery remain major financial hurdles. Enterprise-grade firewalls, SOC monitoring and secondary DR sites are often unaffordable when procured individually.
With SahakarBox, NUCFDC provides smaller UCBs access to:
• Enterprise-grade security infrastructure at affordable costs
• Instant failover and business continuity in case of outages, cyberattacks or data corruption
• A secure and compliant disaster recovery setup, significantly strengthening resilience and regulatory alignment
SahakarBox enhances the confidence of UCBs in meeting cybersecurity norms, protecting customer data and ensuring operational continuity.
With the RBI emphasising digital transformation aligned with risk appetite and operational capacity, how can NUCFDC help UCBs tailor their tech upgrades responsibly?
Each UCB must adopt technology in line with its capabilities, risk appetite and customer needs. NUCFDC is supporting responsible modernisation through:
Modular technology adoption: UCBs can integrate individual modules such as digital lending, analytics or compliance dashboards, without being forced into full-stack transformation.
Centralised risk and compliance monitoring: Cyber hygiene solutions, regulatory compliance systems and monitoring tools are hosted centrally to create consistency across UCBs and ensure no bank is left behind.
By making digital adoption scalable, modular and aligned with regulatory expectations, NUCFDC ensures that UCBs modernise at the right pace while maintaining competitiveness.
What KPIs like liquidity turnaround, tech adoption rate or deposit growth should define NUCFDC’s success over the next 3–5 years?
Over the next three to five years, NUCFDC’s success will be measured through key indicators. The first is turnaround time, with a goal to bring average loan processing durations down from 18 days to under three days. Digital adoption will be tracked by the percentage of UCBs using Sahakar CBS, UPI switch, SOC and digital lending platforms, targeting at least 80 per cent sector-wide adoption.
Compliance health will be measured through zero regulatory reporting pendency and proactive cyber threat responses. Deposit growth, especially among younger customers attracted to modern banking services, will serve as an indicator of renewed customer trust. Finally, NUCFDC aims to reduce IT and compliance costs for UCBs by at least 30 per cent through shared services, ensuring modernisation remains economically sustainable.
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