RBI to issue discussion paper on capital raising avenues for UCBs

The Reserve Bank of India on Wednesday said it will issue a discussion paper on capital raising avenues for Urban Co-operative Banks (UCBs).

The discussion paper will be based on the recommendations of an RBI Working Group, which was constituted to further operationalise the broad-based recommendations of the Expert Committee (chaired by N.S. Vishwanathan, former Deputy Governor, RBI) on the newly enabled (in 2022) capital related provisions.

The central bank noted that the initial set of guidelines on issue and regulation of share capital and securities for UCBs to ensure alignment with the Banking Regulation (Amendment) Act, 2020 were issued in 2022.

However, these guidelines did not cover the newly enabled capital related provisions such as issuance of special shares, issuance of shares at a premium, etc., which are new to co-operative banking sector.

The Report of the Expert Committee on UCBs had provided broad guiding principles through its recommendations on these provisions.

Prabhat Chaturvedi, CEO, National Urban Co-operative Finance and Development Corporation (NUCFDC) said the regulator is focused to make the UCBs an integral part of the Indian financial ecosystem, boost their competitiveness and maximise their capacity to serve their customers.

“Focusing on capital-raising options is vital for the stability and growth of these institutions. This discussion paper will be instrumental in actively engaging with UCBs and supporting them with measures necessary for their development,” he said.