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The Reserve Bank of India on Monday said full implementation of core banking solution will be included as an additional criterion for classifying an urban co-operative bank (UCB) as financially sound and well managed (FSWM).
Hitherto, UCBs fulfilling criteria, among others, such as capital to risk weighted assets ratio of not less than 10 per cent; gross non-performing assets (NPAs) of less than 7 per cent and net NPAs of not more than 3 per cent; were classified as FSWM banks.
The other criteria prescribed by the RBI for classifying a UCB as financially sound and well managed are: net profit for at least three out of the preceding four years, subject to it not having incurred a net loss in the immediate preceding year; no default in the maintenance of cash reserve ratio / Statutory Liquidity Ratio during the preceding financial year; sound internal control system with at least two professional directors on the Board; and regulatory comfort.
Regulatory complianceWhen it comes to regulatory comfort, the RBI said UCBs should have an impeccable record of regulatory compliance and no warning letter / cautionary advice should have been issued to or monetary penalty imposed on the bank on account of violation of RBI directives / guidelines during the preceding three financial years.
The RBI said the new criteria would henceforth be considered for processing applications received from UCBs for opening of on-site/off-site / mobile ATMs, applications under Annual Business Plans, extension of area of operation, shifting of premises and all other permissions from RBI.
Value-added serviceMeanwhile, to offer value added services to their customers, the RBI has decided to permit all UCBs which have implemented core banking solution fully to offer internet banking (view only) facility to their customers subject to compliance to security features.
UCBs offering Internet banking (view only) facility to their customers should ensure that online facility offered is strictly non-fund based service such as balance enquiry, balance viewing, account statement download, request for supply of cheque-books etc. and no online fund-based transactions are allowed.
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