The Reserve Bank of India (“RBI”) vide Press Release: 2022-2023/561 dated July 19, 2022 has released the Revised Regulatory Framework for Urban Co-operative Banks (“UCBs”) (“Revised Framework”).
With a view to comprehensively decipher problems and prospects of UCBs, the RBI in February 2021 constituted an Expert Committee (“Committee”) under the chairpersonship of RBI’s ex-Deputy Governor Shri N. S. Vishwanathan.
The Committee, after consulting stakeholders and members of public, recommended several changes in respect to, inter-alia, the regulatory framework, capital requirement, Capital to Risk-weighted Assets Ratio (“CRAR”), branch expansion and exposure limits.
Key Aspects of Revised Framework:
Following is a list of key recommendations accepted by RBI in the Revised Framework:
a) Tier 1 will consist of all unit UCBs, salary earner’s UCBs irrespective of deposit size, and all other UCBs having deposits up to Rs.100 crore;
b) Tier 2 will consist of UCBs with deposits of more than Rs. 100 crore and upto Rs.1000 crore;
c) Tier 3 will consist of UCBs with deposits of more than Rs. 1000 crore and upto Rs.10,000 crore;
d) Tier 4 will consist of deposits of more than Rs.10,000 crore.
UCBs are required to comply with the aforementioned CRAR requirement in a phased manner within a period of three years.
Please find a copy of the Press Release, here.
This update has been contributed by Ayush Chaturvedi (Associate) and Vallari Dronamraju (Associate).
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