RBI Policy
To float paper on capital raising for primary urban co-op banks
This story was originally published at 13:42 IST on 9 October 2024
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--RBI Das: To float paper on capital raising for primary urban co-op bks
MUMBAI – The Reserve Bank of India will issue a discussion paper on capital raising avenues for urban co-operative banks, Governor Shaktikanta Das said in his monetary policy statement detailed Wednesday. The decision was taken to provide more flexibility to these banks and gather feedback and suggestions from the stakeholders, Das said.
Das further noted that the RBI had previously taken several steps to strengthen the urban co-operative banking sector. In 2022, the RBI issued guidelines on the issuance and regulation of share capital and securities by these banks. On Mar. 8, 2022, the RBI released specific norms for primary urban co-operative banks regarding capital and securities issuance. In the draft, the RBI had sought specific feedback on whether to maintain the rule linking shareholding to borrowing, considering urban co-operative banks are required to maintain a minimum capital-to-risk weighted assets ratio of 9% and tier-1 capital of 5.5%.
The regulator also issued a prompt corrective action framework for primary (urban) co-operative banks in July, which will be applicable to all urban co-operative banks under tier-2, tier-3 and tier-4 categories. The provisions of the prompt corrective action framework will be effective from Apr. 1, 2025. However, urban co-operative banks, which are under all-inclusive directions, are exempted from the prompt corrective action framework, the RBI said. End
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Reported by Sachi Pandey
Edited by Namrata Rao
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