RBI revises regulatory framework for UCBs

The Reserve Bank of India has revised the regulatory framework for urban co-operative banks (UCBs), prescribing minimum net worth of Rs. 2 crore for Tier-1 banks and Rs. 5 crore for all other banks.

While Tier-1 UCBs shall continue to maintain a minimum CRAR (Capital to Risk Weighted Assets) of 9 per cent on an ongoing basis, Tier-2 to -4 UCBs shall maintain a minimum CRAR of 12 per cent on an ongoing basis.

All unit UCBs and salary earners’ UCBs (irrespective of deposit size), and all other UCBs having deposits up to Rs. 100 crore are classified as Tier-1 UCBs.

Tier-2 UCBs are banks with deposits more than Rs. 100 crore and up to Rs. 1,000 crore; Tier-3 UCBs are banks with deposits more than Rs. 1,000 crore and up to Rs. 10,000 crore; and Tier-4 UCBs are banks with deposits more than Rs. 10,000 crore.

RBI said UCBs, which currently do not meet the minimum net worth requirement, shall achieve the minimum net worth of Rs. 2 crore or Rs. 5 crore in a phased manner. Such UCBs shall achieve at least 50 per cent of the applicable minimum net worth on or before March 31, 2026, and the entire stipulated minimum net worth on or before March 31, 2028.