What changed
Previously, non-SLR investments by UCBs were capped at 10% of total deposits, and unlisted securities within that could not exceed 10%. Now, capital subscriptions for UO membership are fully exempt from both these limits.
What it means for you
UCBs can now invest in the Umbrella Organization without worrying about breaching their non-SLR or unlisted securities thresholds. This encourages voluntary capital support for NAFCUB, strengthening the sector's collective representation and crisis management framework.
What you must do
- Update internal investment policies to reflect the exemption for UO capital subscriptions.
- Ensure that only investments specifically for UO membership are treated as exempt, not other non-SLR holdings.
- Maintain separate records of UO investments to demonstrate compliance during audits.
Who it affects
All Primary (Urban) Co-operative Banks, National Federation of Urban Co-operative Banks and Credit Societies Ltd. (NAFCUB)
Does this exemption apply to all non-SLR investments by UCBs?
No, the exemption is only for capital subscriptions made to acquire membership in the Umbrella Organization (NAFCUB). Other non-SLR investments remain subject to the existing 10% deposit cap and unlisted securities sub-limit.
When did this circular take effect?
The instructions came into effect from the date of the circular, March 3, 2022.
Is the investment in the UO mandatory for UCBs?
No, the circular states that UCBs may subscribe to the capital of the UO on a voluntary basis.