The move comes after a slew of regulatory changes by the RBI following the Rs 4,500-crore PMC Bank fraud and to ensure better regulation of such lenders which are heavily influenced by regional political heavyweights.
NICB shareholders passed the resolution at a special general body meeting on Saturday. It will now be approaching the RBI and Central Registrar of Societies for further action, the bank said in a statement.
The decision has been taken under Voluntary Transition of Primary (Urban) Co-operative Banks (UCBs) into Small Finance Banks (SFBs) dated September 27, 2018, it said.
Its vice chairman Hiren Bhanu said has a networth of Rs 230 crore as compared to the Rs 200 crore required under regulations, and also has sound financial indicators like less than 0.5 per cent net non-performing assets and capital adequacy of over 12 per cent.
The bank, which operates in Maharashtra and Gujarat, said it is well placed from a technological platform perspective and exuded confidence of meeting all the criteria to get itself converted into a small finance bank.
A federation of UCBs in Maharashtra had decided to stage a protest at the NICB meeting with a request of not voting for conversion, calling the recent RBI moves as an existential threat to the sector.