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Urban Cooperative Banks to report Exposure of Rs. 5 Crore or more to CRILC

urban cooperative banks

On 16th January 2020, RBI with the motive to save the Urban Cooperative Banks asked urban cooperative banks (UCBs) to report exposures of ₹5 crores or more to a CRILC (Central Repository on information on Large Credit), within a month of quarter-end.

Through the XBRL reporting platform of RBI, Urban Co-operative Banks need to submit the data on large exposures within 30 days from the quarter-end. RBI is of the view that-By putting in place appropriate systems, banks may submit the return on a more frequent periodicity.

The Reports filed by cooperative banks will consist of three sections —

  • Uncovering the large borrowers,
  • Particulars of technically or prudentially written-off accounts, and
  • Details of balance in the current account.

Further, while submitting the data on large credits to the Reserve Bank of India, banks are required to take utmost care that the data should be précised, accurate and upright because failingto do so would result in penal action.

Mandates by Reserve Bank of India

On 27 December 2019, RBI has mandated the cooperative banks to report credit information to the (CRILC). The Reason behind the reporting is to bring the Cooperative banks closer to the reporting standards of commercial banks, which also includes the classification of an account as a Special mention account (SMA).

Further, On 5 December, the RBI had announced a bundle of measures related to UCBs which includes-the norms for exposure and cybersecurity and Credit repository.The database of Central Repository of Information on large credits is used by banks including (Cooperative Banks) and other financial institutions to share with Reserve Bank of India,the classification status of borrowers.

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What is Special Mention Account?

To identify the weakness in the loan accounts at an early stage, RBI has introduced the classification of a Special Mention Account. SMA serves as a risk management techniquethat helps the banker to become aware of the Early Warning Signals at an early stage and to check the potential NPAs and initiate corrective actions to capture the loans from becoming NPAs at future date.

Further, by making several changes in lending norms, RBI has also restricted UCBs from offering large corporate loans.

Note – Large Commercial banks like SBI have been fined for not furnishing and complying with the CRILC requirements.

Recent Notifications by RBI for UCBs

On December 27, 2019, RBI has mandated all UCBs with total assets of Rs 500 crore and above shall report credit information which shall include classification of an account as Special Mention Account (SMA), on all borrowers having aggregate exposure of Rs 5 crore and above. Further, UCBs need to submit the data report in CRILC from the quarter ended December 31,2019.

The draft guidelines are issued by the RBI with a plan to restrict urban cooperative banks’ (UCB) exposure to a single borrower at 10% and a group of connected borrowers at 25%of their tier-I capital, At present, the limits are 15% of a single borrower and 40% of a group of connected borrower.

Applicability of the revised exposure limits

It shall apply to all types of fresh exposures taken by UCBs.

Further, the existing exposures, which are more than the revised limits will be required to bring down to the revised exposure limit within the time limit by March 31, 2023.

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Conclusion

To save the Urban Cooperative Bank from the dual regulation and to support the cooperative bank from falling, RBI has taken corrective measures by drafting the exposure limit and for credit reporting platforms which will result in data accuracy and integrity. Penal Provision shall be implied in case of failure.

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