RBI Revises Eligibility Criteria for UCBs in 2nd Sch. of RBI Act, Aligning With the Revised Regulatory Framework

Circular No. RBI/2023-24/115 DoR.REG/LIC.No.72/16.05.000/2023-24, Dated 17.01.2024

After the release of the Revised Regulatory Framework for Urban Co-operative Banks (UCBs) on July 19, 2022, revised categorization norms for UCBs for regulatory purposes was notified and the criteria for classifying a UCB as Financially Sound and Well Managed (FSWM) have been revised. Now, the RBI has decided to revise the eligibility norms for inclusion of UCBs in the Second Schedule to the Reserve Bank of India Act, 1934 to bring them in conformity with the Revised Regulatory Framework.

In this regard, the Government of India vide notification dated Sep 04, 2023, has notified that the licensed Tier 3 and Tier 4 Primary (Urban) Co-operative Banks, fulfilling the criteria stipulated for Financially Sound and Well Managed Urban Co-operative Banks by the Reserve Bank of India.

Further, eligible UCBs satisfying the following criteria shall be considered for inclusion in the Second Schedule:

a) CRAR of at least 3 % more than the minimum CRAR requirement applicable to the UCB; and

b) No major regulatory and supervisory concerns.

The information mentioned above shall be based on the assessed financials and findings of RBI inspection report or audited financial statements, whichever is latest. Such eligible UCBs may submit their application for inclusion in the Second Schedule to the Reserve Bank of India Act, 1934 to the concerned Regional Office of the Department of Supervision of the Reserve Bank along with the following documents (two sets):

a) Copy of resolution passed by the Annual General Body/Board of Directors to make an application to RBI for inclusion in the Second Schedule to the Reserve Bank of India Act, 1934 and containing the name(s) of bank official(s) authorized to correspond with RBI in this regard; and

b) Major financial details of the bank together with copies of the published balance sheet for the last three years.

The revised instructions shall come into force from the date of issue of the circular i.e., 17.01.2024.

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