RBI issues Notification for provisioning on interbank exposure of Primary (Urban) Co-operative Banks

Apr 22, 2020 | by Avantis RegTech Legal Research Team

Industry Specific Compliance

The Reserve Bank of India (RBI) on April 20, 2020, has issued Notification for Provisioning on interbank exposure of Primary (Urban) Co-operative Banks (UCBs) under All Inclusive Directions (AID). The imposition of AID restricts the bank from discharging its liabilities except as permitted by RBI. This impacts the withdrawal of interbank deposits placed by other UCBs with such bank.

Thus, to ensure that such exposures are objectively recognised in the financial statements of UCBs, RBI has decided the followings:-

a) The interbank exposures arising from deposits placed by UCBs with a UCB under AID and their non-performing exposures arising from discounted bills drawn under LCs issued by a UCB under AID shall be fully provided within five years at the rate of 20% annually.

b) If the UCBs choose to convert such deposits into long term perpetual debt instruments, provision on the portion of deposits converted into such instruments shall not be required.

These instructions will come into force with immediate effect.

[Notification No. DOR.(PCB).BPD.Cir.No.11/16.20.000/2019-20]


Related Updates

Alternate Text

Get updates on the go on RuleZbook Mobile App.