What changed
This is an annual consolidation of all existing instructions on IRAC norms for UCBs issued up to June 30, 2012. It supersedes the previous master circular dated July 1, 2011. No new policy changes were introduced; the circular merely updates and consolidates previous guidelines.
What it means for you
Urban co-operative banks must continue to apply objective, recovery-based income recognition and asset classification norms. The health code system is no longer a supervisory requirement, though banks may retain it internally. All provisioning must align with asset classification categories, and any stricter state cooperative law provisions prevail.
What you must do
- Replace the July 1, 2011 master circular with this updated version for all IRAC-related compliance.
- Ensure income recognition is based on actual recovery record, not subjective judgment.
- Classify assets as NPAs using borrower-wise (not facility-wise) criteria as per the circular.
- Review provisioning norms for all loan categories, including agricultural advances and restructured assets.
- Report NPA data to RBI as per the prescribed formats and timelines.
Who it affects
All Primary (Urban) Co-operative Banks, Chief Executive Officers of UCBs, Credit and risk management teams in UCBs, Compliance and audit departments of UCBs
Does this master circular introduce any new NPA classification rules?
No, it consolidates all existing instructions issued up to June 30, 2012. The previous circular from July 1, 2011 is superseded, but no new policy changes are introduced.
Can our bank continue using the health code system for internal purposes?
Yes, the health code system is no longer a supervisory requirement, but banks may retain it at their discretion for internal management.
What should we do if state cooperative law has stricter norms than this circular?
You must follow the more stringent requirement, whether from state law or this RBI circular, as per paragraph 1.3 of the master circular.