Monday, 30th October 2017

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Check on urban co-op banks

New norms on loans to a single entity, a group or interconnected borrowers

  • Published 6.12.19, 1:22 AM
  • Updated 6.12.19, 1:22 AM
  • a min read
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In reporting, the RBI proposes to bring the UCBs under the CRILC framework. UCBs will have to strengthen off-site supervision and recognise financial distress quickly. (Shutterstock)

The RBI will amend some regulatory guidelines of urban co-operative banks in the wake of the PMC Bank scam, including exposures to entities and bringing them under a stricter reporting framework. The aim is to bring down the concentration risk in the exposures of UCBs and strengthen financial inclusion.

The guidelines would primarily relate to exposures to single and group or inter-connected borrowers, promotion of financial inclusion and priority sector lending.

According to the banking regulator, the measures will strengthen the resilience and sustainability of UCBs and protect the interest of depositors. An appropriate timeframe will be provided to comply with the revised norms. The RBI will issue a draft circular proposing the changes for stakeholder comments.

In reporting, the RBI proposes to bring the UCBs under the CRILC framework. The RBI had earlier created a Central Repository of Information on Large Credits (CRILC) of scheduled commercial banks, all-India financial institutions and certain non-banking financial

companies with multiple objectives, which, include strengthening offsite supervision and early recognition of financial distress.

“With a view to building a similar database of large credits extended by primary UCBs, it has been decided to bring such entities with assets of Rs 500 crore and above under the CRILC reporting framework,” the RBI said. Detailed instructions will be issued by the end of the month.

HDFC Bank website crash

RBI deputy governor M.K. Jain said a team was analysing the reasons behind the crash of the HDFC Bank netbanking website for two consecutive days this week. Bank customers could not access their accounts online and the bank had attributed the problem to a glitch without disclosing much details. “Our team has gone to really identify the reasons and find out what we can give them (HDFC Bank) as a direction,” Jain said.