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Cooperative Banking

RBI lays down norms for classification of UCBs as financially sound and well-managed

In order to ensure a sound and stable cooperative sector, select UCBs have been termed as Financially Sound and Well Managed (FSWM).

The UCBs are now permitted to classify themselves as FSWM based on the following revised criteria, which will be applicable with immediate effect.

  • The CRAR shall be at least 1 percentage point above the minimum CRAR applicable to a UCB as of the reference date
  • Net NPA of not more than 3%
  • Net profit for at least three out of the preceding four years subject to it not having incurred a net loss in the immediately preceding year
  • No default in the maintenance of CRR/SLR during the preceding financial year
  • Sound internal control system with at least two professional directors on the board
  • Core Banking Solution (CBS) fully implemented
  • No monetary penalty should have been imposed on the bank on account of violation of RBI directives/guidelines during the last two financial years.

The process of deciding the eligibility for being classified as an FSWM UCB may be carried out by UCBs themselves as per the revised criteria based on the assessed financials and findings of the RBI inspection report or audited financial statements, whichever is latest. The boards of the banks shall examine the compliance to the FWSM criteria and pass the necessary resolution approving the same and inform the regional office of the department of supervision, Reserve Bank of India, within 15 calendar days from the date of passing the resolution.


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