Reserve Bank of India vide its Circular dated 1st December, 2022 decided to revise the criteria for UCBs to be classified as Financially Sound and Well Managed (FSWM) in view of Revised Regulatory Framework for Urban Co-operative Banks (UCBs) released by RBI on July 19, 2022 based on the recommendation of the Expert Committee on Primary (Urban) Co-operative Banks as under:
| With regard to circular DCBR.CO.LS (PCB) Cir.No.4/07.01.000/2014-15 dated January 28, 2015, on “Review of norms for classification of Urban Co-operative Banks (UCBs) as Financially Sound and Well Managed (FSWM)” for criteria prescribed for considering the UCBs as FSWM, the revised criteria, for determining the FSWM status are as given under: The CRAR shall be at least 1 percentage point above the minimum CRAR applicable to an UCB as on 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 immediate 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; andNo monetary penalty should have been imposed on the bank on account of violation of RBI directives / guidelines during the last two financial years. Further, the process of deciding the eligibility for being classified as a FSWM UCB may be carried out by UCBs themselves as per the revised criteria based on the assessed financials and findings of RBI inspection report or audited financial statements, whichever is latest. The necessary resolution shall be passed by Boards of the banks after examining the compliance to FWSM criteria and by approving the same and inform the concerned Regional Office of Department of Supervision, Reserve Bank of India immediately, not later than within 15 calendar days from the date of passing the resolution and may review the compliance with FSWM criteria every year at Board level immediately after the audit of the financial statements and RBI inspection report as and when received. The above process will be subject to supervisory review. Further, the list of the Circular mentioned in the Annexure of the given circular will stand repealed on the issue of this Circular. |
This Circular is applicable to all Primary (Urban) Co-operative Banks and shall come into immediate effect.
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