Podcast
Questions and Answers
NUCFDC mission is to foster mutual support and protect ______ in their growth.
NUCFDC mission is to foster mutual support and protect ______ in their growth.
UCBs
UCBs having asset size of ₹5,000 crore or above have been advised to appoint a chief ______ officer.
UCBs having asset size of ₹5,000 crore or above have been advised to appoint a chief ______ officer.
risk
UCBs are subject to both on-site inspection and off-site ______.
UCBs are subject to both on-site inspection and off-site ______.
surveillance
The statutory inspections assess the Capital Adequacy, Asset Quality, Management, Earnings, ______ and Systems & Control.
The statutory inspections assess the Capital Adequacy, Asset Quality, Management, Earnings, ______ and Systems & Control.
Signup and view all the answers
The inspections are conducted under Section 35 read with Section 56 of the ______ Regulation Act, 1949.
The inspections are conducted under Section 35 read with Section 56 of the ______ Regulation Act, 1949.
Signup and view all the answers
Off-site surveillance involves periodic prudential returns submitted by ______ to RBI.
Off-site surveillance involves periodic prudential returns submitted by ______ to RBI.
Signup and view all the answers
Governance and oversight of ______ and Management is also reviewed during inspections.
Governance and oversight of ______ and Management is also reviewed during inspections.
Signup and view all the answers
The analysis of off-site returns may act as a trigger to take up a UCB for ______ before it is scheduled.
The analysis of off-site returns may act as a trigger to take up a UCB for ______ before it is scheduled.
Signup and view all the answers
The RBI has permitted UCBs to open specialized branches and ______ chests.
The RBI has permitted UCBs to open specialized branches and ______ chests.
Signup and view all the answers
UCBs have been categorized into four tiers for ______ purposes.
UCBs have been categorized into four tiers for ______ purposes.
Signup and view all the answers
UCBs with deposits more than ₹10,000 crore fall under Tier ______.
UCBs with deposits more than ₹10,000 crore fall under Tier ______.
Signup and view all the answers
One of the services UCBs can now offer is ______ banking.
One of the services UCBs can now offer is ______ banking.
Signup and view all the answers
The regulatory requirements include norms for ______ adequacy.
The regulatory requirements include norms for ______ adequacy.
Signup and view all the answers
Scheduled UCBs have been granted access to Liquidity Adjustment Facility (LAF) and Marginal ______ Facility (MSF).
Scheduled UCBs have been granted access to Liquidity Adjustment Facility (LAF) and Marginal ______ Facility (MSF).
Signup and view all the answers
The deposits of UCBs are reckoned as per audited ______ sheet.
The deposits of UCBs are reckoned as per audited ______ sheet.
Signup and view all the answers
UCBs can act as PAN service ______.
UCBs can act as PAN service ______.
Signup and view all the answers
The amalgamations of the DCCBs with StCBs must be sanctioned by the ______ in terms of the provisions of the Banking Regulation Act.
The amalgamations of the DCCBs with StCBs must be sanctioned by the ______ in terms of the provisions of the Banking Regulation Act.
Signup and view all the answers
DCCBs are allowed to open new places of business or install ATMs only after obtaining prior approval from the ______.
DCCBs are allowed to open new places of business or install ATMs only after obtaining prior approval from the ______.
Signup and view all the answers
RBI has allowed RCBs to offer services such as mobile banking and distribute ______ products.
RBI has allowed RCBs to offer services such as mobile banking and distribute ______ products.
Signup and view all the answers
Co-operative banks serve as foundational institutions in India’s banking system, catering to ______ and lower-income groups.
Co-operative banks serve as foundational institutions in India’s banking system, catering to ______ and lower-income groups.
Signup and view all the answers
The resilience of co-operative banks during the global financial crisis highlighted their significance within both ______ and emerging economies.
The resilience of co-operative banks during the global financial crisis highlighted their significance within both ______ and emerging economies.
Signup and view all the answers
The PCA Framework shall be applicable to all UCBs under Tier 2, Tier 3 and Tier 4 categories except UCBs under ______ Directions.
The PCA Framework shall be applicable to all UCBs under Tier 2, Tier 3 and Tier 4 categories except UCBs under ______ Directions.
Signup and view all the answers
The objective of the PCA Framework is to enable supervisory intervention at an appropriate time and require UCBs to initiate and implement ______ measures to restore their financial health.
The objective of the PCA Framework is to enable supervisory intervention at an appropriate time and require UCBs to initiate and implement ______ measures to restore their financial health.
Signup and view all the answers
The PCA Framework will be effective from ______ 1, 2025.
The PCA Framework will be effective from ______ 1, 2025.
Signup and view all the answers
Key areas for monitoring in the revised PCA Framework include Capital, Asset Quality, and ______.
Key areas for monitoring in the revised PCA Framework include Capital, Asset Quality, and ______.
Signup and view all the answers
Breach of any risk threshold may result in the invocation of ______.
Breach of any risk threshold may result in the invocation of ______.
Signup and view all the answers
RBI may impose PCA on any bank during the course of a year in case the ______ so warrant.
RBI may impose PCA on any bank during the course of a year in case the ______ so warrant.
Signup and view all the answers
The Reserve Bank of India entered Memoranda of Understanding (MoU) with all State Governments and the Central Government since ______.
The Reserve Bank of India entered Memoranda of Understanding (MoU) with all State Governments and the Central Government since ______.
Signup and view all the answers
The reported or audited annual financial results and ongoing supervisory assessment made by ______ are used to place a bank under PCA Framework.
The reported or audited annual financial results and ongoing supervisory assessment made by ______ are used to place a bank under PCA Framework.
Signup and view all the answers
The Reserve Bank will not be precluded from taking any supervisory action other than those indicated in this circular, based on the ______ of each case.
The Reserve Bank will not be precluded from taking any supervisory action other than those indicated in this circular, based on the ______ of each case.
Signup and view all the answers
A State-level Task Force for Co-operative Urban Banks (TAFCUB) was constituted in each State for ______.
A State-level Task Force for Co-operative Urban Banks (TAFCUB) was constituted in each State for ______.
Signup and view all the answers
The exit of non-viable banks could be through merger, conversion into societies, or ______ as the last option.
The exit of non-viable banks could be through merger, conversion into societies, or ______ as the last option.
Signup and view all the answers
The Reserve Bank has issued guidelines for financial ______ to aid the revival of weak banks.
The Reserve Bank has issued guidelines for financial ______ to aid the revival of weak banks.
Signup and view all the answers
Guidelines for voluntary transition of UCBs into ______ Banks (SFBs) was brought out in 2018.
Guidelines for voluntary transition of UCBs into ______ Banks (SFBs) was brought out in 2018.
Signup and view all the answers
The Priority Sector Lending (PSL) target for UCBs was increased from 40% to ______% to strengthen their role in financial inclusion.
The Priority Sector Lending (PSL) target for UCBs was increased from 40% to ______% to strengthen their role in financial inclusion.
Signup and view all the answers
Contribution towards eligible funds with NABARD, NHB, and ______ has been prescribed to disincentivize non-achievers.
Contribution towards eligible funds with NABARD, NHB, and ______ has been prescribed to disincentivize non-achievers.
Signup and view all the answers
UCBs achieving the PSL targets are incentivized by higher limits on ______ repayment loans.
UCBs achieving the PSL targets are incentivized by higher limits on ______ repayment loans.
Signup and view all the answers
Tier 1 UCBs were permitted to achieve the requirement of ______ in a staggered manner by March 31, 2025.
Tier 1 UCBs were permitted to achieve the requirement of ______ in a staggered manner by March 31, 2025.
Signup and view all the answers
A comprehensive cyber security framework was issued on ______.
A comprehensive cyber security framework was issued on ______.
Signup and view all the answers
RBI’s Supervisory strategy for Cyber Security includes an incident ______ mechanism.
RBI’s Supervisory strategy for Cyber Security includes an incident ______ mechanism.
Signup and view all the answers
The graded approach aims to help UCBs bolster their ______ preparedness.
The graded approach aims to help UCBs bolster their ______ preparedness.
Signup and view all the answers
Rural credit co-operatives primarily aim to provide credit to ______ at affordable cost.
Rural credit co-operatives primarily aim to provide credit to ______ at affordable cost.
Signup and view all the answers
UCBs were categorized into four levels based on their digital ______.
UCBs were categorized into four levels based on their digital ______.
Signup and view all the answers
An onsite IT Examination (ITE) focuses on verifying compliance with the cybersecurity ______.
An onsite IT Examination (ITE) focuses on verifying compliance with the cybersecurity ______.
Signup and view all the answers
Rural credit co-operatives address the twin issues of rural indebtedness and ______.
Rural credit co-operatives address the twin issues of rural indebtedness and ______.
Signup and view all the answers
Study Notes
Chapter 9: Regulation and Supervision of Co-operative Banks
- Cooperatives are a reminder that economic viability and social responsibility can be pursued together, according to former UN Secretary General Ban Ki-moon.
- Mahatma Gandhi believed wealth belonged to the community and should be used for its welfare, emphasizing the co-operative principle of mutual help.
History of Co-operative Movement in India
- The co-operative movement in India dates back to the 19th century with the formation of the first mutual aid society in Gujarat in 1889.
- The Co-operative Society Act of 1904 marked a significant milestone, enabling the first credit society registered under this act in Kancheepuram, Tamil Nadu.
- In 1919, co-operative institutions were transferred from the Central Government to Provincial States.
Characteristics of Co-operative Institutions
- Co-operative institutions have a defined area of operation.
- Boards of directors are democratically elected by shareholders.
- Borrowing from these institutions is primarily restricted to members, with exceptions for certain loans to non-members.
- Members have one vote per share.
- Shares are not listed or traded.
Difference Between Co-operative Credit Societies and Co-operative Banks
- Co-operative societies are a state subject and fall under the purview of State Governments.
- Co-operative credit societies primarily facilitate credit for members through deposits from those members.
- Co-operative credit societies operating as banks are authorized to accept public deposits.
- Urban Co-operative Banks (UCBs) are regulated under either State Co-operative Societies Acts, or Multi-State Co-Operative Societies Act, 2002, depending on their area of operation.
Legal Framework for Regulating Co-operative Banks
-
The Banking Regulation Act (originally the Banking Companies Act) came into effect in 1949.
-
Co-operative banks came under dual control: State/Central Governments and the Reserve Bank of India.
-
Recent amendments to the Banking Regulation Act (1949), as well as the Maharashtra State Co-operative Societies Act (2002) (and related amendments), address concerns with the functioning and governance of co-operative societies.
Regulation of UCBs
- Reserve Bank of India (RBI) has the power to regulate UCBs, derived from the Banking Regulation Act, 1949, and the Reserve Bank of India Act, 1934.
- UCBs are categorized and supervised based on their size and financial structure (Tier 1-4).
- RBI has set minimum net worth and capital adequacy requirements for different tiers of UCBs.
Revised Regulatory Framework for UCBs
- UCBs are categorized into four tiers for regulatory purposes based on deposit size.
- Minimum net worth requirements vary depending on the tier and location of the UCB.
- Minimum capital adequacy requirement for credit of risk-weighted assets (CRAR) also varies based on tier.
- UCBs which do not meet the minimum requirements in a timely manner face phased implementation to meet the requirements.
National Urban Cooperative Finance and Development Corporation Limited (NUCFDC)
- NUCFDC acts as an umbrella organization for UCBs and a self-regulatory organization.
- NUCFDC works to support the urban co-operative sector by providing financial support, regulation, improving governance and addressing competition concerns.
Appointment of Chief Risk Officer (Primary Urban Co-operative Banks) and Supervision of UCBs
- Banks with assets over ₹5,000 crore are advised to appoint a Chief Risk Officer, along with managing risk through a Board risk-management committee.
- UCBs are subject to both on-site (inspections) and off-site (surveillance) supervision for monitoring compliance to statutory provisions.
Prompt Corrective Action (PCA) Framework for UCBs
- The PCA framework enables timely intervention to address financial weakness in UCBs, requiring corrective measures to be undertaken.
- The PCA framework focuses on Capital, Asset Quality and Profitability.
- Indicators like CRAR, NPA Ratio, Net profit are closely monitored for breaches.
Framework for Compromise Settlements and Technical Write-offs
- Regulations govern compromise settlements and technical write-offs for lending institutions.
- These measures include out-of-court resolution, compromise settlements, or other statutory mechanisms.
- RBI has not provided guidelines regarding compromise settlements/write-offs for cooperative banks.
Provisioning for Standard Assets
- A standard set of provisioning norms was harmonized in 2023, applicable to all UCBs in relevant categories of investments, ensuring consistent treatment across tiers.
Regulatory Measures to Enhance Cyber Security for UCBs
- Baseline cyber security controls were established in 2018.
- A tiered approach was adopted to implement the framework based on the digital maturity of individual UCBs.
- Incident reporting and communication mechanisms with other entities are in place for prompt response and mitigation.
Rural Co-operatives
- Rural credit co-operatives provide credit to farmers, playing a vital role in rural development.
- The long-term cooperative credit structure is overseen by higher-level banks (SCARDBs and PCARDBs) at the apex/district and village level.
- Short-term co-operative credit structure is also crucial for farmers' short-term financial needs.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Related Documents
Description
Test your knowledge on the regulations and governance practices for Urban Cooperative Banks (UCBs). This quiz covers topics such as inspections, asset classification, and the appointment of officers under the relevant acts. Perfect for students and professionals interested in banking regulations.
