What changed
Previously, all UCBs were directed to close CSGL accounts of other UCBs. Now, RBI has revised eligibility criteria: only scheduled UCBs meeting a net worth threshold of Rs 200 crore, a CRAR of 10% or more, and operating in states that have signed an MOU with RBI can open and maintain CSGL accounts.
What it means for you
This change tightens access to CSGL facilities, restricting them to stronger, well-capitalised UCBs in compliant states. For other UCBs, this may limit their ability to hold government securities through CSGL accounts, potentially affecting their investment and liquidity management.
What you must do
- Verify if your UCB meets the new eligibility criteria: scheduled status, net worth >= Rs 200 crore, CRAR >= 10%, and state MOU signed.
- If eligible, ensure compliance with the operational guidelines notified in the Gazette of India Extraordinary dated December 2, 2009.
- If not eligible, note that the circular does not specify alternative arrangements; refer to earlier instructions to close CSGL accounts.
- Acknowledge receipt of this circular to your respective Regional Office.
Who it affects
Scheduled urban co-operative banks, Non-scheduled urban co-operative banks, UCBs in states without MOU with RBI, UCBs with net worth below Rs 200 crore or CRAR below 10%
What is the net worth requirement for a UCB to open a CSGL account?
The UCB must have a net worth of Rs 200 crore or more.
Does this circular apply to all UCBs?
No, it applies only to scheduled urban co-operative banks that meet the net worth and CRAR criteria and are in states that have signed an MOU with RBI.
What should a UCB do if it does not meet the new eligibility criteria?
The circular does not specify alternatives; it only reiterates earlier instructions to close CSGL accounts. Banks should consult RBI or seek professional advice for holding government securities.