Executive Summary:
This circular from the Reserve Bank of India (RBI), dated January 17, 2024, revises the eligibility norms for Primary Urban Cooperative Banks (UCBs) to be included in the Second Schedule to the Reserve Bank of India Act, 1934, aligning them with the Revised Regulatory Framework for UCBs. It specifies the criteria UCBs must meet and the application process for inclusion. The revised instructions are effective from the date of the circular, repealing the circular dated September 27, 2013.
Key Points / Main Content:
Eligibility Norms Revision:
* Revises eligibility norms for UCBs' inclusion in the Second Schedule to align with the Revised Regulatory Framework.
* Considers Tier 3 and Tier 4 UCBs that meet Financially Sound and Well Managed (FSWM) criteria.
* Requires maintenance of minimum deposits for Tier 3 UCB categorization for two consecutive years.
* Based on Government of India notification F.No.3162023AC, published September 23, 2023.
Specific Criteria for Inclusion:
* Must have a Capital to Risk-Weighted Assets Ratio (CRAR) at least 3% above the applicable minimum requirement.
* Must have no major regulatory and supervisory concerns.
Application Process:
* UCBs meeting criteria can apply for inclusion in the Second Schedule.
* Information should be based on assessed financials and RBI inspection report or audited financial statements, whichever is latest.
* Submit applications to the concerned Regional Office of Department of Supervision, or to Department of Supervision, RBI, Central Office (Mumbai UCBs).
* Application must include:
* A copy of the resolution passed by the Annual General Body/Board of Directors authorizing the application and listing authorized bank officials.
* Major financial details of the bank and copies of published balance sheets for the last three years (two sets).
Effective Date and Repeal:
* Instructions are effective from the date of the circular (January 17, 2024).
* Circular UBD.CO.BPDPCB.No.2016.05.000201314 dated September 27, 2013 is repealed.
Impact Analysis:
Tier 3 and Tier 4 Primary Urban Cooperative Banks (UCBs):
Impact: UCBs seeking inclusion in the Second Schedule must now meet revised eligibility criteria, including specific CRAR requirements and adherence to FSWM standards. Inclusion makes them eligible financial institutions under the Reserve Bank of India Act, 1934, Section 42.
Action Required: Eligible UCBs should assess their compliance with the revised norms, prepare the required documentation, and submit their application to the relevant RBI office if they meet the criteria and wish to be included in the Second Schedule.
Reserve Bank of India (RBI):
Impact: The RBI is responsible for implementing the revised norms, processing applications from UCBs, and updating the Second Schedule accordingly.
Action Required: The RBI needs to communicate these changes to the relevant regional offices and update its internal procedures for evaluating applications for inclusion in the Second Schedule.
Key Entities Referenced
Reserve Bank of India: The central bank of India, which regulates the country's banking system.
Primary Urban Cooperative Banks: A type of cooperative bank in India that primarily serves urban areas.
Reserve Bank of India Act, 1934: An act of the Parliament of India that governs the Reserve Bank of India.
Revised Regulatory Framework for Urban Cooperative Banks: A regulatory framework issued by the Reserve Bank of India for Urban Cooperative Banks.
Tier 3 and Tier 4 Primary Urban Cooperative Banks: Categories of Primary Urban Cooperative Banks based on their deposit size as defined by the Reserve Bank of India.
Financially Sound and Well Managed Urban Cooperative Banks: Urban Cooperative Banks that meet certain financial and management criteria set by the Reserve Bank of India.
Gazette of India: An official publication of the Government of India, publishing official notifications and rules.
Mumbai, Maharashtra: The location of the Reserve Bank of India's Central Office.
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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