Master Circular on IRAC Norms for UCBs

What changed

RBI issued a consolidated master circular (DOR.STR.REC.14/21.04.048/2023-24) that supersedes the April 1, 2022 version. It compiles all existing instructions on income recognition, asset classification, provisioning, and related matters for UCBs into one document. The circular lists all consolidated circulars in Annex 9 but introduces no new regulatory requirements.

What it means for you

For UCBs, this master circular simplifies compliance by providing a single reference for IRAC norms, reducing the need to track multiple circulars. Banks must ensure their internal policies align with the updated consolidation, especially on NPA classification (90-day overdue rule) and provisioning for fraud accounts. No immediate operational changes are required, but adherence to the consolidated guidelines is mandatory.

What banks were required to do at the time

• Review the master circular and update internal IRAC policies to match the consolidated guidelines.
• Ensure NPA classification follows the 90-day overdue rule for term loans and 'out of order' status for OD/CC accounts.
• Verify provisioning norms for fraud accounts and retirement benefits are correctly applied.
• Train staff on the consolidated circular to ensure consistent asset classification and income recognition.

Who it affects

Primary (Urban) Co-operative Banks, UCB compliance and risk management teams, UCB auditors and loan officers