What changed
RBI consolidated and updated ALM guidelines for all Urban Co-operative Banks into a single comprehensive direction. The new framework introduces a tiered approach, with Level I UCBs (deposits below ₹100 crore with specific conditions such as single district or contiguous districts with 95% deposits/advances) having simpler requirements. It mandates detailed structural liquidity statements, short-term dynamic liquidity statements, and interest rate sensitivity statements with specific annexes for scheduled and non-scheduled UCBs.
What it means for you
UCBs must now implement a formal ALM governance structure with board-approved policies and limits. Liquidity risk management becomes more rigorous, requiring regular preparation of structural liquidity and short-term dynamic liquidity statements. Interest rate risk management through traditional gap analysis and sensitivity statements is now mandatory for all UCBs, with Level I UCBs having some exemptions.
What you must do
- Review and update your ALM policies and limits to align with the new Directions, ensuring board approval.
- Set up systems to generate Structural Liquidity Statement (SLS) and Short-term Dynamic Liquidity statement as per the prescribed annexes.
- Implement Interest Rate Sensitivity (IRS) statement preparation for your UCB category (Scheduled/Non-Scheduled/Level I).
- Train ALM committee and risk teams on the new reporting formats and compliance timelines.
- For Level I UCBs, confirm your classification and ensure compliance with simplified requirements.
Who it affects
All Urban Co-operative Banks (UCBs), Scheduled UCBs, Non-Scheduled UCBs, Level I UCBs (deposits below ₹100 crore), Board of Directors and ALM committees of UCBs
What is the effective date of these Directions?
The Directions are effective from the date of issue, November 28, 2025.
Are Level I UCBs exempt from all requirements?
No, Level I UCBs have simplified requirements. They are exempt from currency risk management but must comply with liquidity risk management, including structural liquidity and short-term dynamic liquidity statements.
What happens to the old ALM guidelines?
The Directions repeal and replace previous ALM guidelines for UCBs, with a saving clause for actions taken under the old framework.