- The Reserve Bank of India (RBI) has resumed licensing for Urban Cooperative Banks (UCBs) after a 22-year hiatus following recommendations of the Malegam Committee. - New guidelines allow financially sound tier-3 and tier-4 UCBs to expand, backed by stricter audit norms, statutory structures, and enhanced supervisory frameworks. - Dual regulatory control historically exercised by the RBI and State Registrars of Cooperative Societies under the cooperative federalism framework has faced structural evolution, especially post the 2020 Banking Regulation Amendment Act. - The policy shift aims to balance grassroots financial inclusion with rigorous systemic stability, reducing vulnerabilities that previously led to bank failures and moratoriums. - **Banking Regulation Act 1949:** The primary statute governing banking operations and regulatory powers over commercial and cooperative banks in India, providing the RBI legal authority to license, regulate, and supervise banking institutions. - **Banking Regulation Amendment Act 2020:** Legislation that expanded the Reserve Bank of India’s regulatory and supervisory powers over cooperative banks, bringing cooperative governance closer to commercial banking standards. - **Reserve Bank of India:** India's central banking institution which controls the monetary policy of the national currency, regulates the banking system, and acts as the banker and supervisor of all commercial and cooperative banks. **Introduction** The Reserve Bank of India has reopened licensing for Urban Cooperative Banks (UCBs) after a 22-year freeze, following the Malegam Committee recommendations. The updated framework introduces rigorous auditing rules, stricter capital adequacy standards, and improved governance to ensure financial stability while expanding cooperative banking services. **Core Issue and Detailed Points** - The Reserve Bank of India (RBI) has resumed licensing for Urban Cooperative Banks (UCBs) after a 22-year hiatus following recommendations of the Malegam Committee. - New guidelines allow financially sound tier-3 and tier-4 UCBs to expand, backed by stricter audit norms, statutory structures, and enhanced supervisory frameworks. - Dual regulatory control historically exercised by the RBI and State Registrars of Cooperative Societies under the cooperative federalism framework has faced structural evolution, especially post the 2020 Banking Regulation Amendment Act. - The policy shift aims to balance grassroots financial inclusion with rigorous systemic stability, reducing vulnerabilities that previously led to bank failures and moratoriums. **Key Statutory Bodies, Acts & Concepts** - **Banking Regulation Act 1949:** The primary statute governing banking operations and regulatory powers over commercial and cooperative banks in India, providing the RBI legal authority to license, regulate, and supervise banking institutions. - **Banking Regulation Amendment Act 2020:** Legislation that expanded the Reserve Bank of India’s regulatory and supervisory powers over cooperative banks, bringing cooperative governance closer to commercial banking standards. - **Reserve Bank of India:** India's central banking institution which controls the monetary policy of the national currency, regulates the banking system, and acts as the banker and supervisor of all commercial and cooperative banks.