What changed
Previously, UCBs only needed to provide the documents listed in Annex II of the November 2006 circular. Now, they must also furnish specific information on availability of skilled manpower and infrastructure, the internal control/audit system, and risk management systems in place.
What it means for you
This tightens the entry bar for UCBs wanting to deal in foreign exchange. Banks must invest in building robust risk frameworks and skilled teams before applying. Lenders with weak internal controls or inadequate staffing will find it harder to get AD-I or AD-II licences.
What you must do
- Review your current manpower, infrastructure, internal audit, and risk management systems against RBI's expectations.
- Prepare a detailed submission covering these four areas when applying for an Authorised Dealer licence.
- Ensure your internal control and audit systems are documented and audited before filing the application.
- Train or hire staff with foreign exchange expertise to meet the 'skilled manpower' requirement.
Who it affects
Primary (Urban) Co-operative Banks, UCBs applying for Authorised Dealer Category I or II licence, Compliance and risk management teams at UCBs
What additional information must UCBs now submit for an AD licence?
Beyond the documents listed in Annex II of the November 2006 circular, UCBs must provide specific details on skilled manpower availability, infrastructure, internal control/audit systems, and risk management systems.
Does this circular apply to all UCBs or only new applicants?
It applies to all Primary Urban Co-operative Banks submitting an application for an Authorised Dealer licence, whether for Category I or II.
When did this requirement become effective?
The circular was issued on July 5, 2007, and the additional information requirement took effect from that date for all new AD licence applications.