The Reserve Bank of India vide its notification dated 3rd March 2022 has exempted urban co-operative banks from the 10% cap for their investments in the umbrella organisation.
As per RBIs earlier circular dated 30th January 2009, in which Paragraph 2(i) states that the non-SLR (statutory liquidity ratio) investments shall be limited to ten per cent of a bank’s total deposits as on March 31 of the previous year. Further, paragraph 2(iii)(b) states that investments in unlisted securities shall not exceed ten per cent of the total non-SLR investments at any time.
RBI has accorded regulatory approval to National Federation of Urban Co-operative Banks and Credit Societies Ltd. (NAFCUB) in June 2019 for formation of Umbrella Organization (UO) for the UCB Sector. The approval inter-alia permits UCBs to subscribe to capital of the UO on voluntary basis.
However, through this notification, it has been advised that the investment made for subscribing to the capital of the UO, for acquiring its membership, shall be exempt from the limits prescribed above.
