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Lessons from PMC: RBI to relook at exposure limits for urban cooperative banks

RBI will update guidelines on UCBs to relook at the exposure norms for single and group borrowers.

, ET Bureau|
Updated: Dec 05, 2019, 07.16 PM IST
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Reserve Bank of India (RBI) will update guidelines on urban co-operative banks (UCBs) primarily to relook at the exposure norms for single and group/interconnected borrowers, for these lenders. UCBs with assets above Rs 500 crore have also been asked to report on the RBI’s Central Repository of Information on Large Credits (CRILC), just like their commercial banking counterparts.

“These measures are expected to strengthen the resilience and sustainability of UCBs and protect the interest of depositors. An appropriate timeframe will be provided for compliance with the revised norms,” the RBI said. The RBI announcement after its monetary policy review came in the light of the collapse of Pune Maharashtra Co-operative Bank (PMC) mainly to highly misappropriate exposure to the HDIL group.

The CRILC system which includes commercial banks and certain non-banking financial companies will help RBI strengthen offsite supervision and early recognition of financial distress. Guidelines on this will issued by December 31.

RBI will also prescribe a comprehensive cyber security framework for the UCBs, based on their digital depth and interconnectedness with the payment systems landscape, digital products offered by them and assessment of cyber security risk.

“The framework would mandate implementation of progressively stronger security measures based on the nature, variety and scale of digital product offerings of banks. This would bolster cyber security preparedness and ensure that the UCBs offering a range of payment services and higher Information Technology penetration are brought at par with commercial banks in addressing cyber security threats,” RBI said. Detailed guidelines in this regard will be also issued by December 31.

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