RBI vide its Notification dated 24th April 2023 to, All Primary (Urban) Co-operative Banks.
Circular dated December 01, 2022, in which Urban Co-operative Banks (UCBs) have been categorized into four Tiers for regulatory purposes: Tier 1, Tier 2, Tier 3 and Tier 4.
The current standard assets provisioning norms for UCBs consolidated in the Master Circular dated April 01, 2022 are based on the earlier categorization of UCBs into Tier I and Tier II as defined in para 4 of circular dated May 06, 2009.
The provisioning norms for standard assets have been harmonised to apply to all categories of UCBs, regardless of Tier.
The standard asset provisioning norms for Tier I, Tier 2, Tier 3 and Tier 4 UCBs under the revised framework are as follows:
a) Direct advances to agriculture and SME sectors which are standard, shall attract a uniform provisioning requirement of 0.25 percent of the funded outstanding on a portfolio basis.
b) Advances to the commercial real estate (CRE) sector which are standard shall attract a uniform provisioning requirement of 1.00 percent of the funded outstanding on a portfolio basis.
c) For advances to the commercial real estate – residential housing (CRE-RH) sector, which are standard, the provisioning requirement shall be 0.75 percent.
d) For all other advances, banks shall maintain a uniform general standard asset provision of a minimum of 0.40 percent of the funded outstanding on a portfolio basis.
Tier I UCBs are allowed to achieve the provisioning requirement of 0.40% on loans and advances in a staggered manner by March 31, 2025. This means provision on all standard loans and advances outstanding as on March 31, 2023 will be increased to 0.30% by March 31, 2024, 0.35% by September 30, 2024 and 0.40% by March 31, 2025.
The guidelines come into effect from the date of this circular.
Link of the circular: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12491&Mode=0
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