Releasing its annual report for 2023-24, Reserve Bank of India said that the Department of Regulation (DoR) has identified the goal for supervision of UCBs in 2024-25 which included Strengthening the cyber/IT risks assessment as well as the Central Payments Fraud Information Registry (CPFIR) reporting will be extended to local area banks, STCBs, DCCBs, RRBs and non-scheduled UCBs for payment fraud reporting.
The report said, “The extant instructions on the liquidity management framework of UCBs are being reviewed, and a draft Master Direction on the subject is under examination”.it said.
“On August 11, 2023, the Reserve Bank granted approval for issuance of certificate of registration (CoR) to National Urban Cooperative Finance and Development Corporation Ltd. (NUCFDC), the proposed UO for UCBs, as a non-deposit accepting type-II NBFC, subject to the prescribed conditions. Subsequently, the final CoR was issued to the company on February 8, 2024”, the RBI said.
The RBI’s report said further “Deposit insurance extended by the DICGC covers all commercial and cooperative banks that are licensed by the Reserve Bank. The number of registered insured banks stood at 1,997 as on March 31, 2024 comprising 140 commercial banks (including 12 SFBs, 6 PBs, 43 RRBs and 2 LABs) and 1,857 cooperative banks 1,472 urban cooperative banks, 33 state cooperative banks and 352 district central cooperative banks)”, the report stated.
Urban cooperative banks (UCBs) witnessed an improvement in their capital adequacy, with their capital to risk-weighted assets ratio (CRAR) surpassing the minimum requirement across all tiers in September 2023.
“The Department continuously monitored the performance of UCBs during the year and undertook measures for a safe and well-managed cooperative banking sector”, the report added.
The Department reviewed and issued guidelines in the regulatory areas of UCBs including, revised criteria regarding inclusion of UCBs in the second schedule of the RBI Act, 1934; introduction of an automatic route for branch expansion in the approved area of operation for financially sound and well managed (FSWM) UCBs in all tiers (except salary earners’ banks); and guidelines on change in the name of cooperative banks and amendment of their bye laws. The review of guidelines on area of operation of UCBs is currently under examination, the RBI report informed.
It further reads, IT examination of all the level IV UCBs and some select level III UCBs was carried out during the year. Based on heightened risk materialising through digital channels, select level III UCBs (as per their digital depth) offering mobile and/or internet banking services were advised to get a gap assessment done through CERT-In11 empanelled auditors vis-à-vis the extant cyber security framework and certain restrictions were imposed on the outlier banks. Based on improvement in compliance position, the restrictions are being removed gradually, it noted.