FOR URBAN CO-OPERATIVE BANKS, THE RBI INTENDS TO MODIFY THE SHARE CAPITAL AND SECURITIES NORMS
The Reserve Bank of India (RBI) has proposed revisions to the proposed circular for the issue and regulation of primary (urban) co-operative bank share capital and securities. The RBI has changed its guidelines to allow urban cooperative banks to raise funds. UCBs are permitted to raise equity share capital in the same way they have in the past, by issuing equity shares to persons enrolled as members in their area of operation, in line with their bye-laws, and by issuing additional equity shares to current members.
The RBI has proposed that any refund of share capital to members or their nominees be subject to certain conditions, including that the bank’s capital adequacy ratio is at least 9%, as determined by the most recent audited financial statements and the most recent CRAR as determined by the RBI during a statutory inspection. The bank’s capital adequacy should not fall below the regulatory minimum of 9% as a result of the repayment. The Reserve Bank of India has issued instructions to cooperative banks to ensure that their investors are aware of the risk features of regulatory capital requirements.
It has also requested that cooperative banks obtain a specific signature from investors to ensure that they are aware of the instruments’ features and hazards. It has been requested that urban co-operative banks do not benchmark floating rate instruments to fixed deposit rates.
UNDER COFEPOSA, THE GOVERNMENT ESTABLISHES AN ADVISORY BOARD
In exercise of the powers conferred by clause (a) of Section 8 of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974), and in supersession of the Government of India’s Notification in the Ministry of Finance (Department of Revenue) dated 9th March 2021, except as to things done or omitted to be done before such supersession. With immediate effect, the Central Government re-establishes an Advisory Board, which will serve until 22.3.2022, by:
(i) Mr. Justice D.N. Patel, Chief Justice, is the Chairperson of the Commission.
(ii) Hon. Mr. Justice C. Hari Shankar, Member
(iii) Ms. Justice Jyoti Singh, Member