The Reserve Bank of India, on Thursday, said urban cooperative banks (UCBs) with minimum net worth of ₹50 crore and maintaining capital to risk (weighted) assets ratio of 9 per cent and above, are eligible to apply for voluntary transition to small finance bank (SFB).

Under its on-tap scheme for voluntary transition, the RBI said promoters should submit applications along with requisite documents and information relating to the general body resolution by a two-thirds majority and authorising the board of directors to take steps for the transition. The general body resolution also has to identify and approve the promoters.

The promoter has to submit a no-objection letter from the Central Registrar/Registrar of Co-operative Societies to the transition and transfer of assets and liabilities to the banking company incorporated by the promoters with the approval of the RBI.

Project report

The promoters have to furnish a project report covering business potential and viability of the proposed SFB, the proposed area of operation, the business plan, any other financial services proposed to be offered, plan for compliance with prudential norms on CRR/SLR, composition of loan portfolio, priority sector as per the SFB guidelines, and any other information that is considered relevant.

The report should include detailed calculation of capital requirement after transfer of assets and liabilities of the UCB in order to maintain minimum CRAR of 15 per cent from the date of commencement of business.

The applications will be screened by the RBI to ensure eligibility of the applicants. The RBI may apply additional criteria to determine the suitability of the applications, in addition to the prescribed criteria.

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