Latest News | RBI Allows Select Urban Cooperative Banks in Western Region to Refund Capital

Mumbai, Jan 13 (PTI) The Reserve Bank on Wednesday allowed select urban cooperative banks to refund share capital to their members or nominees of deceased members on demand.

Only those urban cooperative banks (UCBs) in western region which have a capital to risk assets ratio (CRAR) of over 9 per cent are allowed to do so, as per an official communication.

"….it has been decided, in the interim, to permit UCBs which maintain CRAR of 9 per cent or above to refund the value of share capital to their members or nominees/heirs of deceased members on demand," read a letter to UCBs written by chief general manager Uma Shankar on Wednesday.

The move can be seen as an interim relief for the banks and their members.

The letter said starting from June 29, 2020, section 4 of the Banking regulation (Amendment) Act has come into force for the UCBs, which after amendments prohibits withdrawal or reduction in share capital by such lenders unless RBI specifies the extent up to which and conditions subject to which such reduction takes place.

It can be noted that as a prudent measure amid the pandemic, which is set to leave a deep financial impact, the RBI has asked all lenders to be very conservative on capital and prohibited them from declaring dividends.

It has also asked all the lenders to raise capital ahead of the hit to asset quality.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)