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RBI Mandates System-based Asset Classification for Urban Co-operative Banks (UCBs)

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RBI mandates system-based asset classification for UCBsOn August 12, 2020, the Reserve Bank of India (RBI) has mandated the urban co-operative banks (UCBs) with assets of Rs 2,000 crore or above as on March 31, 2020 to implement system-based asset classification from 30 June 2021.

  • For UCBs having total assets of Rs 1000 crore or above but less than Rs 2000 crore as on March 31, 2020 and have self-assessed under Level III or Level IV on “Comprehensive Cyber Security Framework for Primary (Urban) Cooperative Banks (UCBs) – A Graded Approach” are mandated to implement it from September 30, 2021.
  • This decision has been taken to improve the efficiency, transparency and integrity of the asset classification process.

Key Points:

UCBs which meet the above criteria as at the end of the current or subsequent financial years are required to implement system-based asset classification within a period of 6 months from the end of the financial year concerned.

-UCBs not meeting the above criteria can also voluntarily implement this system in their own interest.

-All concerned UCBs can conduct pilot runs for this system for its accuracy evaluation in compliance with the applicable RBI instructions in order to make themselves ready for its implementation from the appointed date.

-As of March-end 2019, there were 1,544 UCBs in the country. The share of UCBs with assets greater than Rs 1,000 crore was at 6.5% (of 1,544 UCBs) in 2018-19.

Recent Related News:

On June 13, 2020, RBI  made some changes to the monitoring structure of Financial Markets Infrastructure (FMI) and Retail Payment Systems (RPSs) with the aim to ensure the security and stability of the payment structure. The new framework treats NPCI (National Payments Corporation of India) and National Electronic Fund Transfer (NEFT) as FMIs. 

About Reserve Bank of India (RBI):
Headquarters– Mumbai, Maharashtra
Formation– 1 April 1935
Governor– Shaktikanta Das
Deputy Governors– 4 (Bibhu Prasad Kanungo, Mahesh Kumar Jain, Michael Debabrata Patra, one is yet to be appointed).