Banking Regulations and Risk Management

Tier-I Capital and Exposure Norms

• Tier-I capital for computation of capital adequacy of UCBs is as prescribed in Master Circular dated April 20, 2023, as amended from time to time
• Exposure includes both credit exposure (Loans and Advances) and investment exposure (Non-SLR securities)

Credit Exposure

• Credit exposure includes funded and non-funded credit limits, underwriting and similar commitments, and facilities extended by way of equipment leasing and hire purchase financing
• Credit exposure excludes loans and advances granted against the security of bank's own term deposits
• The sanctioned limit or outstanding whichever is higher shall be reckoned for arriving at credit exposure limit

Housing Loans and Real Estate Exposure

• Ceiling of 10 per cent of total assets can be exceeded by an additional limit of 5 per cent of total assets for the purpose of grant of housing loans to individuals
• Total assets may be reckoned based on the audited balance sheet as on March 31 of the preceding financial year
• Working capital loans given by UCBs against hypothecation of construction materials provided to the contractors who undertake comparatively small construction on their own without receiving advance payments is exempted from the prescribed limit
• UCBs are not permitted to exceed the limit prescribed for grant of housing, real estate, commercial real estate loans to the extent of funds obtained from higher financing agencies and refinance from National Housing Bank
• Tier-1 UCBs are permitted to extend individual housing loans up to a maximum of ₹60 lakh per individual borrower and UCBs categorized in Tier-2 to 4 can extend individual housing loans up to a maximum of ₹140 lakh per individual borrower subject to extant prudential exposure limits

Inter-bank Exposure Limit

• UCBs shall be guided by provisions contained at Para 14.1 (a) of chapter VIII of the Master Direction on ‘Classification, Valuation and Operation of Investment Portfolio of UCBs’ dated April 1, 2023, as updated from time to time for Prudential Inter-bank (Gross) Exposure Limit
• UCBs shall be guided by provisions contained at Para 14.1 (b) of chapter VIII of the Master Direction on ‘Classification, Valuation and Operation of Investment Portfolio of UCBs’ dated April 1, 2023, as updated from time to time for Prudential Inter-bank Counterparty Limit

Placement/Acceptance of Deposits and Other Restrictions

• Placement/acceptance of deposits by UCBs shall be subject to instructions contained under Chapter VIII of Master Direction on Classification, Valuation and Operation of Investment Portfolio of UCBs dated April 1, 2023, as amended from time to time
• UCBs are categorised under respective tiers in terms of the circular DOR.REG.No.84/07.01.000/2022-23 dated December 1, 2022
• It is necessary for UCBs to obtain prior approval of the Registrar of Co-operative Societies concerned before admitting such leasing/hire purchase companies as members

Financing to NBFCs and Other Activities

• UCBs, with working capital funds aggregating to ₹25 crores and above, may finance the NBFC Investment and Credit Companies (NBFC-ICC), subject to the following limits
• Eligible NBFC-ICCs are those having not less than 75 per cent of their assets in equipment leasing and hire purchase, and 75 per cent of their gross income from these two types of activities as per the last audited balance sheet of the companies