**Summary:**
This Reserve Bank of India (RBI) circular, DoR.PCB.BPD.Cir. No.113.05.001/2020-21 dated August 12, 2020, addresses the implementation of system-based asset classification in Urban Co-operative Banks (UCBs). The circular mandates a transition from manual to automated asset classification to improve efficiency, transparency, and integrity.
Specifically, UCBs with total assets of ₹2000 crore or above as of March 31, 2020, are required to implement system-based asset classification by June 30, 2021. UCBs with total assets of ₹1000 crore or above but less than ₹2000 crore as of March 31, 2020, and self-assessed as Level III or Level IV under the Comprehensive Cyber Security Framework for UCBs (circular DoS.COCSITEBC.4083/31.01.052/2019-20 dated December 31, 2019) must implement the system by September 30, 2021. UCBs meeting these criteria in subsequent financial years have six months from the end of the relevant financial year to comply.
The RBI encourages all concerned UCBs to conduct pilot runs to ensure accurate and integrated asset classification before full implementation. While not mandated, UCBs not meeting the specified criteria are also encouraged to voluntarily adopt system-based asset classification.
For further information, contact the Chief General Manager, Department of Regulation, Central Office, Reserve Bank of India, 1st Floor, Bandra-Kurla Complex, Mumbai – 400051. Phone: 022-26571112; Email: cgmdcbrcor@rbi.org.in.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking system.
Primary Urban Cooperative Banks: A type of cooperative bank in India, the target of this circular.
Master Circular DCBR.BPD. PCB MC No.1209.14.000201516: A Reserve Bank of India circular containing consolidated instructions on income recognition, asset classification, provisioning and other related matters for UCBs.
System-based asset classification: An automated process for asset classification in banks, based on RBI instructions.
DoS.COCSITEBC.408331.01.052201920: RBI circular on Comprehensive Cyber Security Framework for UCBs.
Mumbai, Maharashtra: A city in India where the Central Office of Department of Regulation, Reserve Bank of India is located
Neeraj Nigam: Chief General Manager at Reserve Bank of India
Department of Regulation: A department of Reserve Bank of India
भारतीय �रज़वर् बक�
__________________________RESERVE BANK OF INDIA________________________
www.rbi.org.in
RBI/2020-21/23
DoR (PCB). BPD. Cir. No.1/13.05.001/2020-21 August 12, 2020
The Chief Executive Officer
All Primary (Urban) Co-operative Banks
Madam / Dear Sir,
System-based asset classification - UCBs
Please refer to the Master Circular DCBR.BPD. (PCB) MC No.12/09.14.000/2015-16 dated
July 1, 2015 containing consolidated instructions on income recognition, asset classification,
provisioning and other related matters.
2. In order to improve the efficiency, transparency and integrity of the asset classification
process, it has been decided to implement system-based asset classification1 in urban co-
operative banks (UCBs). The relevant instructions in this regard are as under:
2.1 UCBs having total assets of `2000 crore or above as on March 31, 2020 shall
implement system-based asset classification with effect from June 30, 2021.
2.2 UCBs having total assets of `1000 crore or above but less than `2000 crore as on
March 31, 2020 and having self-assessed themselves as being under Level III or Level
IV in terms of the circular DoS.CO/CSITE/BC.4083/31.01.052/2019-20 dated
December 31, 2019 on Comprehensive Cyber Security Framework for UCBs shall
implement system-based asset classification with effect from September 30, 2021.
2.3 UCBs which meet the above criteria as at the end of the current or subsequent
financial years shall implement system-based asset classification within a period of six
months from the end of the financial year concerned.
2.4 For smooth implementation of the system, all concerned UCBs may conduct
pilot/parallel run and evaluate the results for accuracy/integrity of the asset
classification in compliance with the applicable RBI instructions so as to ensure that
they are ready for implementation of the system-based asset classification from the
appointed date.
1 ‘System-based asset classification’ would mean asset classification (downgrading as well as
upgrading) carried out by the CBS / computerized systems of the bank in an automated manner on an
ongoing basis, based on the relevant RBI instructions/guidelines.
िविनयमन िवभागक��ीय कायार्लयसी पहली मंिज़ल बान्�ाकुलार् सकं ुल बान्�ा पूवर्,मुंबई , भारत
, फोन ( , -) 7 , 1112 ई म ,ेल cgm -dcbrco@r ,b i.org.in ( ) - 400051
Department of Regulation, Centra
:
l O02f2fice2,6 C57-7, 1st
;
Floor,
:
Bandra-Kurla Complex, Mumbai - 400051, India
Phone: (022) 26571112; E-mail: cgmdcbrco@rbi.org.in
ब�क िहन्दी म� प�ाचार का स्वागत करता है
चेतावनी भारतीय �रज़वर् ब�क �ारा ईमेल डाक एसएमएस या फोन कॉल के ज�रये कोई भी �ि�गत जानकारी जैसे ब�क खाते का ब्यौरा पासवड र्आ�द नह� माँगा जाता ह।ै यह धन रखने या
—
दने े का �स्ताव भी नह� करता ह।ै ऐसे �स्ताव� का �कसी भी �कार से जवाब मत दीिजए।
: Caution: RBI never- sen,ds m,ails, SMSs or makes calls asking for personal information like bank acc,ount details, passwords, etc.
It never keeps or offers funds to anyone. Please do not respond in any manner to su ch offers.3. UCBs not meeting the above criteria are also encouraged to voluntarily implement the
system-based asset classification in their own interest.
Yours faithfully,
(Neeraj Nigam)
Chief General Manager