New Delhi, Nov 26 (PTI) National Bank for Agriculture and Rural Development (NABARD) Chairman Shaji K V on Tuesday said cooperative banks are expected to be digitised by March 2025 with a view to streamline operations and enhance the efficiency of these financial institutions.

The Reserve Bank of India (RBI) has mandated all cooperative banks to adopt the Core Banking Solution (CBS) marking a significant step towards modernisation.

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"We are on behalf of central government undertaking digitisation of cooperatives. By March 2025 it will happen and by that time we will invite fintechs to work on that. We need a lot of technology solutions to work on these digitised database that we will have besides looking at transaction trails of digital platform," he said.

Speaking at a CII event here, he said NABARD is proposing to set up a common shared services entity across the country for all rural cooperatives.

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"Both government and the RBI have agreed in principle for this entity. We jointly with the central government and cooperative banks will set up a separate company for digital adoption," he said.

This entity will also need lot of fintech collaboration and there are a lot of opportunities for fintechs to partner with both regional rural banks (RRBs) and cooperative banks.

As smaller entities, most cooperative banks are currently not able to invest in technology, he said.

Shaji said fintechs must look to enhance their focus on the cooperatives sector and RRBs, noting that both are engaging with technology in a larger way.

There will be ample room for fintechs to devise tech solutions' work on the digitised database and platforms in the two areas of cooperatives and RRBs in the coming days, he said.

Observing that RRBs are the middle layer of the banking system in the country, he said these banks are engaging in technology in larger way on account of the intervention of the Department of Financial Services (DFS) in the finance ministry.

Now, consolidation of RRBs is also being agreed in-principle by the finance ministry and this could lead to a situation of 'One State One RRB', he added.

Earlier this month, the finance ministry has initiated the fourth round of consolidation for RRBs and the number of such banks is likely to come down to 28 from 43 at present.

As per the the finance ministry roadmap, 15 RRBs operating in various states will be merged to achieve operational efficiency and cost rationalisation.

Among states that will see consolidation of RRBs include Andhra Pradesh, which has the maximum of four RRBs, Uttar Pradesh and West Bengal (3 each), and Bihar, Gujarat, Jammu & Kashmir, Karnataka, Madhya Pradesh, Maharashtra, Odisha and Rajasthan (2 each).

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