What changed
This master circular consolidates and updates all previous instructions on investments by Primary Urban Co-operative Banks up to June 30, 2009, replacing the earlier master circular dated July 1, 2008. It includes sections on restrictions on holding shares in other co-operative societies, statutory SLR investments, investment policy, and non-SLR investments.
What it means for you
Urban co-operative banks now have a single reference document for all investment-related compliance, reducing confusion from multiple circulars. The circular reinforces limits on shareholding in other co-operative societies (2% of owned funds aggregate, 5% of subscribed capital per society) and mandates proper investment policy, valuation, and reporting. Banks must ensure their investment portfolios align with these consolidated guidelines to avoid regulatory action.
What you must do
- Review and update your bank's investment policy to align with all sections of this master circular.
- Ensure shareholding in other co-operative societies does not exceed 2% of owned funds and 5% of subscribed capital per society.
- Verify that all SLR and non-SLR investments are categorized, valued, and reported as per the circular's instructions.
- Check that broker engagement limits and SGL account transactions comply with the circular's guidelines.
- Maintain Investment Fluctuation Reserve as required and submit accurate reporting to RBI.
Who it affects
Primary (Urban) Co-operative Banks, Chief Executive Officers of Urban Co-operative Banks, Compliance and investment departments of Urban Co-operative Banks
What is the limit on holding shares in other co-operative societies?
Total investments in shares of other co-operative societies (excluding certain exempt categories) must not exceed 2% of the bank's owned funds. Additionally, investment in any single such society must not exceed 5% of that society's subscribed capital, and the aggregate investment by all co-operative banks in that society is also capped at 5%.
Does this circular replace all previous investment guidelines?
Yes, this master circular consolidates and updates all instructions on investments by Primary Urban Co-operative Banks issued up to June 30, 2009, superseding the earlier master circular of July 1, 2008. Banks should refer to this document for current compliance.
What are the key sections covered in this master circular?
The circular covers restrictions on shareholding in other co-operative societies, statutory SLR investments, investment policy, general guidelines, SGL accounts, bank receipts, broker engagement, CCIL settlement, trading on stock exchanges, ready forward contracts, repo accounting, non-SLR investments, internal controls, Ghosh Committee recommendations, investment categorization, valuation, Investment Fluctuation Reserve, and reporting.