What changed
RBI has clarified that the product previously referred to as 'Long Term Deposits' in the July 15, 2008 circular must now be called 'Long Term (Subordinated) Deposits'. This is a nomenclature change only; the underlying guidelines remain unchanged.
What it means for you
For UCBs, this is a straightforward rebranding exercise. All existing and future issuances of these deposits must use the new title to ensure regulatory consistency. No impact on capital treatment, maturity, or subordination features. Banks should update their product literature, system labels, and customer communications accordingly.
What you must do
- Rename all existing 'Long Term Deposits' issued under the July 2008 circular to 'Long Term (Subordinated) Deposits' in your records and systems.
- Update all customer-facing documents, including application forms, sanction letters, and deposit receipts, to reflect the new nomenclature.
- Inform your treasury and compliance teams about the change to ensure accurate reporting and regulatory filings.
- Review any pending or future issuances to ensure they are titled correctly from the outset.
Who it affects
Primary (Urban) Cooperative Banks, Compliance officers at UCBs, Treasury departments of UCBs
Does this change affect the capital treatment of these deposits?
No. The circular only changes the name to 'Long Term (Subordinated) Deposits'. All other terms, including subordination features and capital eligibility, remain as per the July 2008 guidelines.
Do we need to reissue existing deposits with the new name?
No reissuance is required. You should update your internal records and future communications to use the new title. Existing deposit contracts remain valid.
Is this applicable to all cooperative banks or only urban ones?
The circular is addressed to Primary (Urban) Cooperative Banks. Other cooperative bank categories should check if similar instructions apply to them.