What changed
This master circular updates and consolidates all prior investment instructions for UCBs up to June 30, 2010, replacing the July 2009 version. It brings together restrictions on shareholding in co-operative societies, SLR and non-SLR investment norms, valuation rules, and broker engagement guidelines into one document.
What it means for you
UCBs must now refer to this single circular for all investment compliance, ensuring uniformity and reducing ambiguity. The 2% of owned funds cap on shares in other co-op societies (excluding certain affiliations) and the 5% per-society limit remain critical for risk management and regulatory adherence.
What you must do
- Review and align your bank's investment policy with all sections of this master circular, especially shareholding limits and SLR requirements.
- Ensure total investments in shares of other co-operative societies (excluding exempt categories) do not exceed 2% of owned funds.
- Verify that investment in any single co-operative society does not exceed 5% of that society's subscribed capital, and monitor aggregate UCB investments in that society.
- Update internal controls and reporting systems to reflect the consolidated guidelines, including valuation and disclosure norms for non-SLR investments.
Who it affects
Primary (Urban) Co-operative Banks, Chief Executive Officers of UCBs, Investment and compliance teams at UCBs
What is the limit on holding shares in other co-operative societies?
Total investments in shares of other co-operative societies (excluding those exempted under Section 19 of the BR Act) must not exceed 2% of the bank's owned funds. Additionally, investment in any single such society cannot exceed 5% of that society's subscribed capital.
Does this circular replace all previous investment guidelines for UCBs?
Yes, this master circular consolidates and updates all instructions on investments by UCBs issued up to June 30, 2010. Banks should treat this as the single reference document for compliance.
Are there any exemptions to the shareholding restrictions?
Yes, shares acquired through state government funds, central co-operative bank holdings in state co-operative banks, and UCB holdings in affiliated central or state co-operative banks are exempt from the 2% limit.