Revised Regulatory Framework for Urban Co-operative Banks (UCBs) - आरबीआय - Reserve Bank of India
Revised Regulatory Framework for Urban Co-operative Banks (UCBs)
The Reserve Bank of India had constituted the Expert Committee on Urban Co-operative Banks (the Committee) on February 15, 2021 under the Chairmanship of Shri N. S. Vishwanathan, former Deputy Governor, Reserve Bank to examine the issues in urban co-operative banking sector, provide a medium term road map, suggest measures for faster resolution of UCBs and recommend suitable regulatory/ supervisory changes for strengthening the sector by leveraging the recent amendments to Banking Regulation Act, 1949 (As Applicable to Cooperative Societies). The report submitted by the Expert Committee was placed on the RBI’s website on August 23, 2021 inviting comments of stakeholders and members of public. The recommendations of the Committee have since been examined for implementation duly factoring the feedback received. 2. The Committee, inter alia, recommended a four-tiered regulatory framework based on size of deposits of the banks and their area of operations. The differentiated regulatory approach was mainly recommended for key parameters such as net worth, Capital to Risk-weighted Assets Ratio (CRAR), branch expansion and exposure limits. Membership in an Umbrella Organization (UO) also formed a vital part of the recommendations. 3. While examining the recommendations, Committee’s vision of turning UCBs into friendly neighborhood banks and the heterogeneity of the sector have been duly kept in view. In order to make the sector more robust and support its orderly growth, the capital requirements have been suitably recalibrated. Further, a suitable glide path has also been provided for a non-disruptive transformation of the sector. The measures for strengthening the sector are also being supplemented by offering more operational flexibility to strong UCBs to serve their desired role in credit intermediation. 4. The major recommendations which have been accepted are as follows:
5. A list of recommendations which are accepted fully, accepted partially with suitable modifications and those under further examination, is furnished in the Annex. The revised instructions, wherever necessary, will be issued separately in due course. (Yogesh Dayal) Press Release: 2022-2023/561 1 Tier 1 - All unit UCBs and salary earner’s UCBs (irrespective of deposit size), and all other UCBs having deposits up to ₹100 crore; Tier 2 - UCBs with deposits more than ₹100 crore and up to ₹1000 crore; Tier 3 - UCBs with deposits more than ₹1000 crore and up to ₹10,000 crore; Tier 4 - UCBs with deposits more than ₹10,000 crore. |