Aiming to bring urban co-operative banks and other banking system into mainstream, Reserve Bank of India (RBI) has decided to allow them to function as small finance banks.
RBI said in its monetary policy statement that, it has been decided to allow voluntary transition of UCBs meeting the prescribed criteria into SFBs. UCBs had been facing financial trouble till a few years ago, prompting the RBI to stop issuing fresh licences. But their performance has improved recently while their numbers have come down due to mergers and closures. UCBs currently face regulation by both the RBI and the respective State governments. By turning into SFBs, they will be regulated only by the RBI.
The regulator has also allowed all banks to spread their mark-to-market losses for the April-June quarter, equally over four quarters.
“It has been decided to grant banks the option to spread the mark-to-market (MTM) losses on investments held in ‘Available for Sale ’ and ‘Held for Trading’ portfolio for the quarter ending June 30, 2018, equally over… four quarters, commencing from the quarter ending June 30.”