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The Reserve Bank of India has revised the criteria for classification of urban co-operative banks (UCBs) as Financially Sound and Well Managed.
Among others, the new criteria, which require maintenance of a minimum capital to risk weighted assets ratio (CRAR) of 10 per cent on a continuous basis, would henceforth be considered for processing applications received from UCBs for branch authorisation.
The earlier stipulation on CRAR was that it should not be less than 10 per cent.
The RBI said, for classification as financially sound a UCB should have Gross Non-performing Assets (NPAs) of less than 7 per cent (no such stipulation prescribed earlier) and net NPAs of not more than 3 per cent (5 per cent).
The criteria relating to no default in the maintenance of cash reserve ratio/ Statutory Liquidity Ratio during the preceding financial year; continuous net profit for the last three years; and sound internal control system with at least two professional directors on the Board, remain unchanged.
As at March-end 2012, there were 1,618 UCBs in the country. They had deposits and loans aggregating to Rs 238,500 crore and Rs 1,58,000 crore, respectively.
ramkumar.k@thehindu.co.in
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