Reserve Bank of India has on14th July, 2021, released ‘Draft Circular on ‘Issue of Share capital and Securities- Primary(Urban) Co-operative Banks’ and HAS invited comments from Urban Co-operative banks(UCBs), sector participants and other interested participants by 31st August, 2021. The circular is based on the changes brought by the Banking Regulation (Amendment) Act, 2020 notified on 29th September, 2020. The Act have come into force for State Co-operative Banks (StCBs) and District Central Co-operative Banks (DCCBs) from April 01, 2021.
UCBs are permitted to raise equity share capital, as hitherto, by way of (i) issue of equity shares to persons within their area of operation enrolled as members, in accordance with the provisions of their bye-laws, and (ii) issue of additional equity shares to the existing members. UCBs shall ensure that all the publicity material / offer document, application form and other communication with the investor should clearly state in bold letters (Arial font, size 14, equivalent size in English / Vernacular version) how a PNCPS / PCPS / RNCPS / RCPS / PDI / LTSB, as the case may be, is different from a fixed deposit, and that these instruments are not covered by deposit insurance.
