“To ensure that the loan policy reflects the approved internal risk appetite and remains in line with the extant norms, it is advised that the credit policy of the bank shall be reviewed by the Board at least once in a financial year” reserve Bank of India said in a notification on Tuesday. The above instructions will come into force with immediate effect, RBI said.
The banking regulator said it has been observed in several UCBs that these policies not only lack comprehensive coverage but also do not require periodic review. As per the April Master Guidelines issued by RBI, Urban Co-operative Banks, with the approval of their Boards, are required to lay down transparent policies and guidelines for credit disbursement, in respect of each broad category of economic activity, taking into account the credit exposure norms Necessary. Various other guidelines issued by the Reserve Bank from time to time.
RBI is taking several measures to strengthen the cooperative banking structure. The banking regulator has earmarked a minimum of Rs 2 crore for Tier-I UCBs operating in a single district and Rs 5 crore for all other UCBs (of all levels), to strengthen the financial resilience of banks and enhance their capacity. hopefully. To fund their development, the guidelines issued recently in the month said.
Tier 1 – UCBs are all unit UCBs and salaried UCBs (irrespective of deposit size), and all other UCBs having deposits up to Rs 100 crore; Tier 2 – Urban Co-operative Banks will be those whose deposits are more than Rs 100 crore and up to Rs 1000 crore; Tier 3 – Urban co-operative banks with deposits above Rs 1000 crore and up to Rs 10,000 crore; Tier 4 – Urban Co-operative Banks with deposits above Rs 10,000 crore.
In order to boost growth opportunities in this sector, RBI has decided to introduce an automatic route for branch expansion for UCBs that meets the revised requirements. In respect of housing loans, it has been decided to assign risk weights only on the basis of Value to Loan (LTV) ratio which will lead to capital savings. This will be applicable at all levels of UCBs, the RBI said.