RBI harmonises provisioning norms for urban cooperative banks

Mumbai: The Reserve Bank on Monday harmonised the provisioning norms for standard assets applicable to all categories of urban cooperative banks (UCBs). In December last year, the RBI categorised UCBs into four tiers including, tiers 1, 2, 3, and 4 for regulatory purposes. Prior to that, such banks fell only in tier 1 and tier 2 categories.

"On a review, it has been decided to harmonise the provisioning norms for standard assets applicable to all categories of UCBs, irrespective of their tier in the revised framework," the central bank said in a circular. Direct advances to agriculture and SME sectors which are standard, would attract a uniform provisioning requirement of 0.25 percent of the funded outstanding on a portfolio basis to all categories of UCBs under the revised framework.

Advances to commercial real estate

Advances to commercial real estate (CRE) sector which are standard shall attract a uniform provisioning requirement of one percent of the funded outstanding on a portfolio basis. In case of the Commercial Real Estate-Residential Housing Sector (CRE-RH) and all other loans and advances, the provisioning requirements would be 0.75 percent and 0.4 percent, respectively.

Categorisation of UCBs

RBI has categorised all unit UCBs and salary earners' UCBs (irrespective of deposit size), and all other UCBs having deposits up to Rs 100 crore in tier 1. In tier 2, it has placed UCBs with deposits more than Rs 100 crore and up to Rs 1,000 crore. Tier 3 will cover banks with deposits more than Rs 1,000 crore and up to Rs 10,000 crore. UCBs with deposits of more than Rs 10,000 crore have been categorised in tier 4.

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