What changed
This is an annual consolidation of all existing IRAC norms for UCBs, updating the previous master circular dated July 1, 2009. No new policy changes were introduced; the circular integrates all instructions issued up to June 30, 2010.
What it means for you
UCBs must ensure their asset classification and provisioning practices align with the consolidated guidelines. The circular reinforces objective income recognition based on recovery records and uniform asset classification. Banks should review their internal systems to comply with these norms, as any divergence due to non-compliance with RBI guidelines will be treated as a supervisory concern.
What you must do
- Replace the 2009 master circular with this updated version for all IRAC-related operations.
- Review and align your bank's asset classification and provisioning processes with the consolidated guidelines.
- Ensure income recognition is based on actual recovery records, not subjective assessments.
- Report NPAs to RBI as per the prescribed format and timelines.
- Maintain internal systems for accurate asset classification and provisioning.
Who it affects
All Primary (Urban) Co-operative Banks, Chief Executive Officers of UCBs, Compliance and risk management teams of UCBs
Does this circular introduce any new norms for UCBs?
No, this is a consolidation of all existing IRAC guidelines issued up to June 30, 2010. It replaces the 2009 master circular but does not introduce new policy changes.
What happens if our bank's asset classification diverges from these guidelines?
Any divergence due to non-compliance with RBI guidelines will be treated as a supervisory concern. Banks must ensure strict adherence to the norms outlined in the circular.
Are state-level cooperative laws still applicable alongside this circular?
Yes, if state cooperative societies acts or rules are more stringent than RBI's guidelines, those must be followed.