What changed
Kapol Co-operative Bank Limited was removed from the Second Schedule to the RBI Act, 1934, via a notification published in the Gazette of India on March 28, 2024. The exclusion was effective from February 22, 2024, and was communicated to all commercial and co-operative banks on April 5, 2024.
What it means for you
For Kapol Co-operative Bank, losing scheduled status means it can no longer access RBI's liquidity facilities, such as refinance, and may face higher borrowing costs. For other banks, this serves as a reminder that co-operative banks must maintain regulatory compliance to retain their scheduled status, affecting interbank transactions and depositor confidence.
What you must do
- Update your internal records to reflect Kapol Co-operative Bank's non-scheduled status for regulatory reporting and interbank dealings.
- Review any exposure or transactions with Kapol Co-operative Bank and assess credit risk implications.
- Inform relevant departments (treasury, risk, compliance) about the change to ensure adherence to RBI guidelines.
Who it affects
Kapol Co-operative Bank Limited, All commercial banks, All co-operative banks, Depositors and creditors of Kapol Co-operative Bank
What does exclusion from the Second Schedule mean for Kapol Co-operative Bank?
It loses its scheduled bank status, which means it can no longer borrow from RBI under normal liquidity windows, and its deposits may not be considered for certain statutory purposes like SLR.
When did this exclusion take effect?
The exclusion was effective from February 22, 2024, as per the RBI notification, and was published in the Gazette on March 28, 2024.
How does this affect other banks?
Other banks should review their interbank exposures and ensure compliance with RBI norms for dealing with non-scheduled banks, as the status change may impact settlement and credit risk.