What changed
This Master Circular replaces the July 1, 2015 version, consolidating all instructions on investments by Primary Urban Co-operative Banks issued up to September 20, 2021. No new policy changes were introduced; it merely updates and compiles existing guidelines into one document.
What it means for you
UCBs now have a single reference for all investment-related compliance, reducing ambiguity. The 2% of owned funds cap on shares in other co-op societies and the 5% per-society limit remain binding, requiring strict monitoring of investment portfolios.
What you must do
- Review and update your investment policy to align with this Master Circular.
- Ensure total shareholding in other co-op societies (excluding exempt categories) does not exceed 2% of owned funds.
- Verify that investment in any single co-op society stays within 5% of that society's subscribed capital.
- Confirm that recipient societies' bye-laws allow retirement of share capital before contributing.
- Train compliance and treasury teams on the consolidated guidelines, especially SLR and non-SLR rules.
Who it affects
Primary Urban Co-operative Banks, Treasury departments of UCBs, Compliance officers at UCBs, Auditors reviewing UCB investment portfolios
What is the limit on holding shares in other co-operative societies?
Total investments in shares of other co-op societies (excluding exempt categories like shares in central/state co-op banks) must not exceed 2% of the bank's owned funds. Additionally, investment in any single society is capped at 5% of that society's subscribed capital.
Does this Master Circular introduce any new investment rules?
No, it consolidates all existing instructions on investments by Primary Urban Co-operative Banks as of September 20, 2021, without introducing new policy changes.
Are there any exemptions to the shareholding limits?
Yes, shares acquired through state government funds, shares held by a central co-op bank in its state co-op bank, and shares held by a UCB in its affiliated central co-op bank or state co-op bank are exempt from these limits.