What changed
The RBI updated its Master Circular for UCBs on prudential norms, incorporating all instructions issued up to March 31, 2025. This revision supersedes the previous circular dated April 2, 2024, but does not introduce any new guidelines or changes to existing policies.
What it means for you
For UCBs, this circular serves as a single reference document for all IRAC norms, simplifying compliance. Banks must ensure their internal policies align with the consolidated instructions, particularly on NPA classification, income recognition, and provisioning. No immediate operational changes are required, but adherence to the updated circular is mandatory.
What you must do
- Review the revised Master Circular and update your bank's internal IRAC policies to reflect the consolidated instructions.
- Ensure all staff involved in credit and risk management are aware of the circular's contents, especially the annexures.
- Verify that your NPA reporting and provisioning practices match the guidelines listed in Annex 9 of the circular.
- Maintain records of compliance with the circular for regulatory inspections.
Who it affects
All Primary (Urban) Co-operative Banks, Risk management and credit departments of UCBs, Compliance officers and internal auditors at UCBs
Does this circular introduce any new prudential norms for UCBs?
No, this Master Circular only consolidates all existing instructions on income recognition, asset classification, and provisioning issued up to March 31, 2025. It does not contain any new guidelines.
What should UCBs do if their state cooperative laws have stricter norms than this circular?
As per paragraph 1.3 of the circular, if state cooperative acts or rules prescribe more stringent requirements, those should continue to be followed.
Where can we find the list of circulars that have been consolidated in this Master Circular?
The list of consolidated circulars is provided in Annex 9 of the Master Circular, which you should refer to for the complete record.