RBI Revises Framework for UCBs

Published on December 04, 2022
Current Context: The Reserve Bank of India (RBI) revised the Framework of Categorization of Urban Co-operative Banks (UCBs) for Regulatory Purposes.
RBI Revises Framework for UCBs
  • This RBI revision will apply to all Primary (Urban) Co-operative Banks with effect from 1st December 2022.
  • The RBI amended the existing two-tiered framework to adopt the four-tiered regulatory framework with the objective to strengthen the financial soundness of the UCBs.
  • According to the revised framework, tier-1 UCBs will have to maintain a minimum Capital Adequacy Ratio (CAR) of 9% while tier-2, tier-3, and tier-4 will maintain a minimum CAR of 12%.
  • The RBI also eased the regulations for foreign branches of banks or All India Financial Institutions (AIFIs) to deal with financial products that aren’t permitted in the country.
  • The RBI is India’s central bank and was established in 1935 under the RBI Act 1934 with its headquarters in Mumbai. The current Governor of it is Shaktikanta Das.


Q.1 The RBI recently amended the existing two-tiered framework related to the UCBs to?
a. Single-Tier Framework
b. Three-Tier Framework
c. Four-Tier Framework
d. No Change

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