The Reserve Bank of India has revised the regulatory framework for urban co-operative banks (UCBs), prescribing minimum net worth of ₹2 crore for Tier-1 banks and ₹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 ₹100 crore are classified as Tier-1 UCBs.
Tier-2 UCBs are banks with deposits more than ₹100 crore and up to ₹1,000 crore; Tier-3 UCBs are banks with deposits more than ₹1,000 crore and up to ₹10,000 crore; and Tier-4 UCBs are banks with deposits more than ₹10,000 crore.
RBI said UCBs, which currently do not meet the minimum net worth requirement, shall achieve the minimum net worth of ₹2 crore or ₹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.
UCBs in Tier-2 to -4, which do not currently meet the revised CRAR of 12 per cent of RWAs, shall achieve the same in a phased manner. Such UCBs shall achieve the CRAR of at least 10 per cent by March 31, 2024, 11 per cent by March 31, 2025, and 12 per cent by March 31, 2026.