Rural Co-op Banks allowed to raise more funds

The Reserve Bank of India has allowed Rural Cooperative Banks (RCBs) to raise funds from people in their area of operation or existing shareholders through a variety of instruments.

RCBs, which include state co-operative banks and district central co-operative banks, can raise funds from preference shares and debt instruments, RBI said in a notification.

RBI said the review is being done following the rural co-operative banks coming under the ambit of the amended Banking Regulation Act.

Such lenders can augment their capital through the issue of preference shares, which can include issue of perpetual non-cumulative preference shares which will be eligible for inclusion in core tier I capital. Besides, tier-II capital instruments, including perpetual cumulative preference shares, redeemable non-cumulative preference shares and redeemable cumulative preference shares can also be utilised.