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Cooperative Banking

UCBs can now achieve PSL targets by March 2026

RBI again likely to hike repo rate by 50bpThe Reserve Bank of India has announced an extension of the timeline and the introduction of incentives to facilitate the achievement of revised Priority Sector Lending (PSL) targets for Urban Cooperative Banks (UCBs).

While revising the PSL targets for the UCB sector, a glide path up to March 2024 was provided by RBI for a non-disruptive transition to achieve the revised targets. While a number of UCBs have met the required milestones as of March 2023, a need has arisen to ease the implementation challenges faced by other UCBs.

RBI Governor Shaktikanta Das said on Thursday after the Monetary Policy Committee (MPC) meet: “It has, therefore, been decided to extend the timelines for achieving the targets by two more years up to March 2026. Further, UCBs which have met the targets as on March 31, 2023 shall be suitably incentivised.”

Compromise settlement is recognised as a resolution mechanism in respect of non-performing assets (NPA) under the Prudential Framework, which is currently applicable to SCBs and select NBFCs. It is proposed to issue comprehensive guidelines on compromise settlements and technical write-offs which will now be applicable to all regulated entities including co-operative banks. Further, it is also proposed to rationalise the extant prudential norms on restructuring of borrower accounts affected by natural calamities.

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