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RBI has revised eligibility norms for Urban Co-operative Banks (UCBs)

Published on January 27, 2024
Current Context: The Reserve Bank of India (RBI) has recently issued several notifications regarding the revised eligibility norms for Urban Co-operative Banks (UCBs).
RBI has revised eligibility norms for Urban Co-operative Banks (UCBs)
  • These include:
    • Rationalization of Branch Authorisation Policy for UCBs
    • Compliance Function and Role of Chief Compliance Officer (CCO) for UCBs
    • Eligibility of UCBs for Liquidity Adjustment Facility (LAF) and Marginal Standing Facility (MSF)
  • These notifications are aimed at enhancing the governance, risk management and operational efficiency of UCBs, as well as aligning them with the Revised Regulatory Framework for UCBs released by RBI on July 19, 2022.
  • The revised eligibility norms apply to UCBs under Tier 3 and Tier 4 categories, except those under All Inclusive Directions (AID).
  • The UCBs under Tier 1 and Tier 2 categories shall continue to be governed by the existing guidelines.
  • The implementation timeline for the revised norms varies depending on the category of the UCBs.

Question:

Q.1 What is the purpose of the recent notifications issued by the Reserve Bank of India (RBI) for Urban Co-operative Banks (UCBs)?
a. To decrease the operational efficiency of UCBs
b. To enhance the governance, risk management, and operational efficiency of UCBs
c. To discontinue the existing guidelines for UCBs
d. To restrict the eligibility of UCBs for Liquidity Adjustment Facility (LAF) and Marginal Standing Facility (MSF)

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