Context
A Reserve Bank-appointed committee has suggested a four-tier structure for the urban cooperative banks (UCBs) depending upon the deposits and prescribed different capital adequacy and regulatory norms for them based on their sizes.
What are Urban Co-operative Banks?
- Urban Co-operative Banks (UCBs) occupy an important place among the Non-Agricultural Credit Society.
- They cater to the credit needs of people residing in urban areas. They advance loans mostly to the small traders, assistants and monthly income group people.
- Urban co-operative banks are regulated and supervised by
- State Registrars of Co-operative Societies (RCS) in case of single-state co-operative banks.
- Central Registrar of Co-operative Societies (CRCS) in case of multi-state co-operative banks and by the Reserve Bank.
Category
UCBs can be split into four categories
- Tier-1 with deposits up to Rs 100 crore.
- Tier-2 with deposits between Rs 100-Rs 1,000 crore.
- Tier-3 with deposits between Rs 1,000 crore to Rs 10,000 ,must function like SFBs if they meet a capital adequacy ratio of 15%.
- Tier-4 with deposits of over Rs 10,000 crore, should be allowed to function like universal banks if they meet the 9% capital adequacy ratio requirement, leverage ratio and have a fit and proper board and chief executive.
- It has suggested that the minimum Capital to Risk-Weighted Assets Ratio (CRAR) for them could vary from 9 per cent to 15 percent.
