Executive Summary:
This circular from the Reserve Bank of India (RBI), dated January 17, 2024, revises the eligibility norms for Urban Cooperative Banks (UCBs) to be included in the Second Schedule to the Reserve Bank of India Act, 1934. This revision aligns with the Revised Regulatory Framework for UCBs issued in July 2022. The revised instructions come into force from the date of the circular, repealing the circular dated September 27, 2013. Eligible UCBs can apply for inclusion to the concerned Regional Office of Department of Supervision.
Key Points / Main Content:
* **Eligibility Norms for Inclusion in Second Schedule:**
* UCBs must be licensed Tier 3 and Tier 4.
* UCBs must fulfill the criteria for Financially Sound and Well Managed (FSWM) UCBs.
* UCBs must maintain the minimum deposits required for categorization as a Tier 3 Urban Cooperative Bank for two consecutive years.
* CRAR must be at least 3% more than the applicable minimum requirement.
* No major regulatory and supervisory concerns should exist.
* **Application Process:**
* Eligible UCBs can apply for inclusion in the Second Schedule.
* Information at 5a shall be based on the assessed financials and findings of RBI inspection report or audited financial statements, whichever is latest.
* Application to be submitted to the concerned Regional Office of Department of Supervision (or Department of Supervision, RBI, Central Office for UCBs under Mumbai office jurisdiction).
* Two sets of documents to be submitted with the application:
* Copy of resolution passed by the Annual General Body/Board of Directors authorizing the application and listing authorized bank officials.
* Major financial details and copies of published balance sheets for the last three years.
* **Statutory Basis and Effective Date:**
* Instructions issued under clause (a) of subsection (6) of section 42 of the Reserve Bank of India Act, 1934.
* Revised instructions effective from the date of the circular.
Impact Analysis:
Primary Urban Cooperative Banks (UCBs)
* Impact: UCBs need to assess their eligibility based on the revised norms to determine if they qualify for inclusion in the Second Schedule to the Reserve Bank of India Act, 1934.
* Action Required: Eligible UCBs need to prepare and submit the required application and supporting documents to the appropriate RBI Regional Office to be considered for inclusion.
Reserve Bank of India (RBI)
* Impact: The RBI will receive and process applications from UCBs seeking inclusion in the Second Schedule, based on the revised eligibility norms.
* Action Required: The RBI needs to implement the revised norms in evaluating UCB applications for inclusion in the Second Schedule.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking sector.
Primary Urban Cooperative Banks: A type of cooperative bank in India that operates in urban areas.
Second Schedule to the Reserve Bank of India Act, 1934: A schedule within the Reserve Bank of India Act, 1934, which lists eligible financial institutions.
Revised Regulatory Framework for Urban Cooperative Banks: A set of updated regulations governing the operations of Urban Cooperative Banks (UCBs).
Financially Sound and Well Managed: A classification used by the Reserve Bank of India to identify well-managed and financially stable Urban Cooperative Banks (UCBs).
Tier 3 and Tier 4 Primary Urban Cooperative Banks: Categories of Urban Cooperative Banks based on their deposit size and operational scope as defined by the Reserve Bank of India.
Mumbai: A city in Maharashtra, location of the Central Office of the Reserve Bank of India where applications for inclusion in the Second Schedule should be sent.
Manoranjan Padhy: Chief General Manager at Reserve Bank of India.
भारतीय �रज़व र् बक�
RESERVE BANK OF INDIA
RBI/2023-24/115
DoR.REG/LIC.No.72/16.05.000/2023-24 January 17, 2024
Managing Director / Chief Executive Officer
All Primary (Urban) Co-operative Banks
Madam / Dear Sir,
Second Schedule to the Reserve Bank of India Act, 1934 – Norms for inclusion
Please refer to our circular UBD.CO.BPD(PCB).No.20/16.05.000/2013-14 dated
September 27, 2013 on the captioned subject.
2. Subsequent to 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 vide circular DOR.REG.No.84/07.01.000/2022-23 dated
December 01, 2022 and the criteria for classifying a UCB as Financially Sound and Well
Managed (FSWM) have been revised vide circular DOR.REG.No.85/07.01.000/2022-23
dated December 01, 2022.
3. It has now been 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.
4. In this regard, Government of India notification F.No.3/16/2023-AC dated September
04, 2023 has been published in Gazette of India on September 23, 2023 notifying that
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, subject to maintenance of minimum deposits required for
categorisation as a Tier 3 Urban Co-operative Bank for two consecutive years, would be
_____________________________________________________________________________________
�व�नयमन �वभाग,क�द्र�य कायार्लय,क�द्र�य कायार्लय भवन,12वीं/13वीं मंिज़ल,शह�द भगत �सहं माग,र्फोटर्,मुबई- 400001
टेल�फोन/ Tel No: 22661602, 22601000 फैक्स/ Fax No: 022-2270 5691
Department of Regulation, Central Office, Central Office Building, 12th/ 13th Floor, Shahid Bhagat Singh Marg, Fort,
Mumbai – 400001
�हदं � आसान है, इसका प्रयोग बढ़ाइएthe eligible financial institutions for the purpose of sub-clause (iii) of clause (a) of sub-
section (6) of section 42 of the Reserve Bank of India Act, 1934 (copy enclosed).
5. Such eligible UCBs satisfying the following criteria shall be considered for inclusion in
the Second Schedule:
a) CRAR of at least 3 per cent more than the minimum CRAR requirement applicable
to the UCB; and
b) No major regulatory and supervisory concerns.
6. The information at 5(a) 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 Department of Supervision (in case
of UCBs under jurisdiction of Mumbai office, the application should be sent to Department
of Supervision, RBI, Central Office) 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.
7. These instructions are issued under clause (a) of sub-section (6) of section 42 of the
Reserve Bank of India Act, 1934.
8. The revised instructions shall come into force from the date of issue of the circular. The
circular UBD.CO.BPD(PCB).No.20/16.05.000/2013-14 dated September 27, 2013 will
thus stand repealed.
Yours faithfully,
(Manoranjan Padhy)
Chief General Manager
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