What changed
Previously, UCBs could only open current/SGL accounts and join INFINET. Now, the Monetary Policy Statement 2011-12 extends NDS-OM membership to well-managed, financially sound UCBs meeting a minimum networth of Rs. 25 crore. The IDMD circular dated November 18, 2011 prescribes the detailed criteria for direct access.
What it means for you
UCBs that qualify can now trade government securities directly on the NDS-OM platform, improving their treasury operations and customer service. However, they must invest in the required infrastructure and bear setup costs. Once they open an SGL account with RBI, they cannot maintain a gilt account with a CSGL holder, but can still participate in non-competitive bidding.
What you must do
- Check if your UCB meets the networth and other criteria specified in the IDMD circular.
- Apply for a no-objection certificate from the CGM-in-charge, Urban Banks Department, RBI Central Office, Mumbai.
- After receiving regulatory clearance, apply to IDMD for NDS-OM membership.
- Ensure the required infrastructure for direct NDS-OM access is in place and budget for setup costs.
- Acknowledge receipt of this circular to your Regional Office.
Who it affects
All licensed Primary (Urban) Co-operative Banks, UCBs not under all-inclusive directions under Section 35A of the Banking Regulation Act, 1949 (AACS), Well-managed and financially sound UCBs with minimum networth of Rs. 25 crore
What is the minimum networth requirement for a UCB to get NDS-OM membership?
The circular refers to the Monetary Policy Statement which specifies a minimum networth of Rs. 25 crore for well-managed and financially sound UCBs.
Can a UCB with an SGL account still hold a gilt account with a CSGL holder?
No, after opening an SGL account with RBI, the UCB cannot open or maintain a gilt account with a CSGL account holder. However, it can continue to bid under the non-competitive bidding scheme.
What is the first step for a UCB to apply for NDS-OM membership?
The UCB must first obtain a no-objection certificate from the Urban Banks Department, RBI Central Office, Mumbai, before applying to IDMD.