Executive Summary:
This circular from the Reserve Bank of India (RBI) outlines a revised regulatory framework for categorizing Urban Cooperative Banks (UCBs). It adopts a four-tiered structure based on deposit size, replacing the existing two-tiered framework. The instructions are effective immediately and apply to all Primary Urban Cooperative Banks.
Key Points / Main Content:
* **Categorization of UCBs:**
* Tier 1: All unit UCBs and salary earners 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.
* **Deposit Calculation:**
* Deposits are calculated based on the audited balance sheet as of March 31st of the preceding financial year.
* **Transition to Higher Tier:**
* UCBs that move to a higher tier due to increased deposits may receive a glide path of up to three years to comply with the new tier's regulatory requirements.
* **Repealed Instructions/Circulars:**
* UBD.CO.LS.Cir.No.6607.0/1.00.02008-09 dated May 06, 2009 (Para 4 on Extension of Area of Operation).
* UBD.PCB.Cir.No.35/09.20.001/07-08 dated March 07, 2008 (Classification of UCBs for Regulatory Purposes Revised Norms).
Impact Analysis:
* **Primary Urban Cooperative Banks (UCBs):**
* Impact: UCBs will be categorized into one of four tiers based on their deposit size, which will determine the applicable regulatory requirements. UCBs that transition to a higher tier may face new compliance obligations.
* Action Required: UCBs must determine their categorization based on their deposit size as of their most recent audited balance sheet. UCBs moving to a higher tier must prepare to meet the regulatory requirements of that tier, potentially within a three-year glide path.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking sector.
Urban Cooperative Banks (UCBs): Financial institutions in the cooperative sector operating in urban areas.
Expert Committee on Urban Co operative Banks: Committee constituted by the Reserve Bank of India to examine issues in the urban cooperative banking sector.
Revised Regulatory Framework for Urban Cooperative Banks: A framework released by the RBI on July 19, 2022, based on the recommendations of the Expert Committee, aimed at strengthening the UCB sector.
Tier 1 UCBs: Category of UCBs including unit UCBs, salary earners UCBs, and other UCBs with deposits up to 100 crore.
Tier 2 UCBs: Category of UCBs with deposits more than 100 crore and up to 1000 crore.
Tier 3 UCBs: Category of UCBs with deposits more than 1000 crore and up to 10,000 crore.
Tier 4 UCBs: Category of UCBs with deposits more than 10,000 crore.
भारतीय �रज़व� ब�क
RESERVE BANK OF INDIA
RBI/2022-23/144
DOR.REG.No.84/07.01.000/2022-23 December 01, 2022
Madam / Sir
Revised Regulatory Framework - Categorization of Urban Co-operative Banks
(UCBs) for Regulatory Purposes
Given the heterogeneity in the cooperative sector, a tiered regulatory framework is
required to balance the spirit of mutuality and co-operation more prevalent in banks of
smaller sizes and those with limited area of operation vis-à-vis the growth ambitions of
the large-sized UCBs to spread their area of operation and undertake more complex
business activities.
2. The Reserve Bank of India had constituted the Expert Committee on Urban Co-
operative Banks to examine the issues in urban cooperative banking sector and to review
regulatory/ supervisory approach for strengthening the sector. Based on the
recommendations of the Expert Committee, RBI had released the Revised Regulatory
Framework for Urban Co-operative Banks (UCBs) on July 19, 2022.
3. Accordingly, it has been decided to adopt a four-tiered regulatory framework, as against
the existing two-tiered framework, for categorization of UCBs. Going forward, this
categorization may be used for differentiated regulatory prescriptions aimed at
strengthening the financial soundness of the UCBs.
4. The categorization of UCBs, based on their deposit size, is enclosed in Annex.
Commencement
5. The instructions shall be applicable with immediate effect.
Applicability
6. This circular is applicable to all Primary (Urban) Co-operative Banks.
(Prakash Baliarsingh)
Chief General Manager
_____________________________________________________________________________________
िविनयमन िवभाग,क� द्रीय काया�लय,क� द्रीय काया�लय भवन,12वी/ं13वी ंमंिज़ल,शहीद भगत िसंह माग�,फोट�,मुबई- 400001
टेलीफोन/ Tel No: 22661602, 22601000 फै �/ Fax No: 022-2270 5691
Department of Regulation, Central Office, Central Office Building, 12th/ 13th Floor, Shahid Bhagat Singh Marg, Fort,
Mumbai – 400001
िहंदी आसान है, इसका प्रयोग बढ़ाइएAnnex
Revised Regulatory Framework - Categorization of Urban Co-operative Banks
(UCBs) for Regulatory Purposes
The UCBs have been categorized into following four tiers for regulatory purposes:
a) Tier 1 - All unit UCBs and salary earners’ UCBs (irrespective of deposit size), and
all other UCBs having deposits up to ₹100 crore;
b) Tier 2 - UCBs with deposits more than ₹100 crore and up to ₹1000 crore;
c) Tier 3 - UCBs with deposits more than ₹1000 crore and up to ₹10,000 crore;
d) Tier 4 - UCBs with deposits more than ₹10,000 crore.
2. The deposits referred to above shall be reckoned as per audited balance sheet as on
31st March of the immediate preceding financial year.
3. If a UCB transits to a higher Tier on account of increase in deposits in any year, it may
be provided a glide path of upto a maximum of three years, to comply with higher
regulatory requirements, if any, of the transited higher Tier.
4. The following instructions/circulars stand repealed on the issue of this circular
Sl.
Circular No. Date Subject
No.
1. UBD.CO.LS.Cir.No.66/07.0 May 06, Para 4 of circular on “Annual Policy
2009
1.000/2008-09 Statement for the year 2009-10 -
Extension of Area of Operation (AOO)-
Liberalisation” containing the definition
of Tier 1 and Tier 2 banks.
2. UBD (PCB).Cir.No.35 March 07, Circular on Classification of UCBs for
/09.20.001/07-08 2008 Regulatory Purposes - Revised Norms
25. The following circular contains existing Guidelines/Directions by the Reserve Bank of
India on Categorization of UCBs.
Sl.
Circular No. Date Subject
No.
1. UBD.CO.LS.Cir.No.66/07.0 May 06, Annual Policy Statement for the year
2009
1.000/2008-09 2009-10 - Extension of Area of Operation
(AOO)-Liberalisation
3