Business Daily from THE HINDU group of publications
Tuesday, Dec 02, 2008
ePaper | Mobile/PDA Version | Audio | Blogs
Business Daily from THE HINDU group of publications Tuesday, Dec 02, 2008 ePaper | Mobile/PDA Version | Audio | Blogs |
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Money & Banking
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Co-operatives Provisioning norms for urban co-ops relaxed
Our Bureau Mumbai, Dec. 1 The Reserve Bank of India on Monday relaxed the provisioning norms for standard assets of Urban Co-operative Banks (UCBs). Further, the risk weights on loans and advances given by these banks against the security of commercial real estate have been reduced. The central bank has relaxed the prudential requirements as a countercyclical measure. Tier-wise revisionAccording to RBI, provisioning requirements in case of Tier II UCBs for all types of standard assets stands were reduced to a uniform level of 0.40 per cent, except in the case of direct advances to agricultural and SME sectors. These sectors will continue to attract a provisioning of 0.25 per cent. Tier I UCBs will continue to make a general provision of 0.25 per cent on all their standard assets. “The revised norms would be effective prospectively, but the provisions held at present should not be reversed. However, in future, if by applying the revised provisioning norms, any provisions are required over and above the level of provisions currently held for the standard category assets; these should be duly provided for,” RBI said in a notification. Loans and advances secured by commercial real estate would attract a risk weight of 100 per cent, as against the extant risk weight of 150 per cent. According to extant guidelines, UCBs are not allowed to finance NBFCs other than those engaged in hire-purchase/leasing. Such companies now stand reclassified as Asset Finance Companies. The risk weights on exposure to such companies will remain unchanged at 100 per cent. More Stories on : Co-operatives | RBI & Other Central Banks
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