Revised Supervisory Action Framework (SAF) for Primary (Urban) Co-operative Banks (UCBs): RBI

Revised Supervisory Action Framework (SAF) for Primary (Urban) Co-operative Banks (UCBs): RBI

• The Reserve Bank of India has decided to rationalize the Supervisory Action Framework (SAF) for Primary (Urban) Co-operative Banks (UCBs) to make it more effective in bringing about the desired improvement in the UCBs as well as speedy resolution of UCBs experiencing financial stress.
• The revised SAF envisages, initiation of corrective action by the UCB and/or supervisory action by RBI on breach of the specified thresholds (triggers) in respect of the specified financial parameters/indicators.
• The UCB may be placed under SAF when
  • its Net NPAs exceed 6% of its net advances
  • it incurs losses for two consecutive financial years or has accumulated losses on its balance sheet
  • its CRAR falls below 9%
  • Also, actions such as imposition of all-inclusive directions under section 35A of the Banking Regulation Act, 1949 and issue of show cause notice for cancellation of banking license may be considered by RBI when continued normal functioning of the UCB is no longer considered to be in the interest of its depositors / public.