What changed
This Master Circular consolidates all prior instructions on capital adequacy for UCBs up to March 31, 2025, replacing the 2024 version. It reiterates phased net worth targets: 50% of minimum by March 31, 2026, full by March 31, 2028. CRAR requirements remain unchanged: 9% for Tier 1, 12% for Tiers 2-4, with phased achievement for Tiers 2-4: 10% by March 31, 2024, 11% by March 31, 2025, and 12% by March 31, 2026.
What it means for you
UCBs must ensure they meet the net worth and CRAR thresholds within the specified timelines or face regulatory action. The phased approach gives weaker banks time to raise capital, but non-compliance could restrict business growth. Banks need to monitor their capital planning closely, especially those in Tiers 2-4 transitioning to 12% CRAR.
What you must do
- Verify your UCB's tier classification and current net worth against the ₹2 crore (single-district) or ₹5 crore (others) minimum.
- If net worth is below minimum, ensure at least 50% is achieved by March 31, 2026, and full by March 31, 2028.
- For Tiers 2-4 UCBs, confirm CRAR is at least 12% by March 31, 2026; if not, plan phased increases accordingly.
- Review Annex 1 for net worth computation and Annex 2 for risk weights to ensure accurate CRAR calculation.
- Update internal capital adequacy policies and reporting to align with this consolidated circular.
Who it affects
All Primary (Urban) Co-operative Banks (UCBs), Tier 1 UCBs (single-district), Tier 2 to 4 UCBs, UCBs currently below minimum net worth or CRAR thresholds
What is the deadline for UCBs to meet the minimum net worth requirement?
UCBs must achieve at least 50% of the applicable minimum net worth (₹2 crore for single-district, ₹5 crore for others) by March 31, 2026, and the full amount by March 31, 2028.
What CRAR must Tier 2 to 4 UCBs maintain, and by when?
Tier 2 to 4 UCBs must maintain a minimum CRAR of 12% of RWAs. Those not meeting it currently must achieve at least 10% by March 31, 2024, 11% by March 31, 2025, and 12% by March 31, 2026.
Does this circular introduce new capital adequacy requirements?
No, this is a consolidation of existing instructions up to March 31, 2025. The net worth and CRAR requirements remain unchanged from previous circulars.