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FSWM 2021

The Reserve Bank of India has revised the criteria for classifying Urban Co-operative Banks as Financially Sound and Well Managed. The key changes include increasing the capital requirement, lowering the net NPA threshold, adding profitability and CBS implementation requirements. Banks can now self-classify based on the revised criteria by board resolution within 15 days.

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Bhavani Bhushan
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55 views4 pages

FSWM 2021

The Reserve Bank of India has revised the criteria for classifying Urban Co-operative Banks as Financially Sound and Well Managed. The key changes include increasing the capital requirement, lowering the net NPA threshold, adding profitability and CBS implementation requirements. Banks can now self-classify based on the revised criteria by board resolution within 15 days.

Uploaded by

Bhavani Bhushan
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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भारतीय �रज़व� ब�क

RESERVE BANK OF INDIA


RBI/2022-23/143
DOR.REG.No.85/07.01.000/2022-23 December 01, 2022

Madam / Sir

Review of norms for classification of Urban Co-operative Banks (UCBs) as


Financially Sound and Well Managed (FSWM)

In order to ensure a financially sound and stable co-operative sector, select UCBs are
termed as Financially Sound and Well Managed (FSWM) subject to fulfillment of certain
parameters. In this context, a reference is made to our circular DCBR.CO.LS (PCB)
Cir.No.4/07.01.000/2014-15 dated January 28, 2015 on “Review of norms for
classification of Urban Co-operative Banks (UCBs) as Financially Sound and Well
Managed (FSWM)” for criteria prescribed for considering the UCBs as FSWM.

2. It has been decided to revise the criteria for UCBs to be classified as FSWM. The
revised criteria in view of Revised Regulatory Framework for Urban Co-operative Banks
(UCBs) released by RBI on July 19, 2022 based on the recommendation of the Expert
Committee on Primary (Urban) Co-operative Banks are given in the Annex.

3. Further, the UCBs are now permitted to classify themselves as FSWM based on this
revised FSWM criteria.

Commencement
4. The revised instructions shall be applicable with immediate effect.

Applicability
5. This circular is applicable to all Primary (Urban) Co-operative Banks.

(Prakash Baliarsingh)
Chief General Manager

_____________________________________________________________________________________
िविनयमन िवभाग,क�द्रीय काया� लय,क�द्रीय काया� लय भवन,12वीं/13वीं मंिज़ल,शहीद भगत िसंह माग� ,फोट� ,मुबई- 400001
टे लीफोन/ Tel No: 22661602, 22601000 फै�/ Fax No: 022-2270 5691
Department of Regulation, Central Office, Central Office Building, 12th/ 13th Floor, Shahid Bhagat Singh Marg, Fort,
Mumbai – 400001
िहं दी आसान है , इसका प्रयोग बढ़ाइए
Annex
Review of norms for classification of Urban Co-operative Banks (UCBs) as
Financially Sound and Well Managed (FSWM)

The revised criteria, for determining the FSWM status have been given as under:
a) The CRAR shall be at least 1 percentage point above the minimum CRAR
applicable to an UCB as on the reference date;
b) Net NPA of not more than 3%;
c) Net profit for at least three out of the preceding four years subject to it not having
incurred a net loss in the immediate preceding year;
d) No default in the maintenance of CRR / SLR during the preceding financial year;
e) Sound internal control system with at least two professional directors on the Board;
f) Core Banking Solution (CBS) fully implemented; and
g) No monetary penalty should have been imposed on the bank on account of
violation of RBI directives / guidelines during the last two financial years.

2. The process of deciding the eligibility for being classified as a FSWM UCB may be
carried out by UCBs themselves as per the revised criteria based on the assessed
financials and findings of RBI inspection report or audited financial statements, whichever
is latest. The Boards of the banks shall examine the compliance to the FWSM criteria and
pass necessary resolution approving the same and inform the concerned Regional Office
of Department of Supervision, Reserve Bank of India immediately, and in any case, not
later than within 15 calendar days from the date of passing the resolution. UCBs may
review the compliance with FSWM criteria every year at Board level as indicated above
immediately after the audit of the financial statements and RBI inspection report as and
when received. This process will be subject to supervisory review.

2
3. The following instructions/circulars stand repealed on the issue of this circular

Sl. No. Circular No. Date Subject

1. DCBR.CO.LS (PCB) January Circular on “Classification of


Cir.No.4/07.01.000/2014-15 28, 2015 UCBs for Regulatory Purposes -
Revised Norms”

2. UBD.CO.LS (PCB) October Definition of FSWM UCBs in


Cir.No.20/07.01.000/2014-15 13, 2014 second para of circular on
circular on “Review of norms for
classification of Urban Co-
operative Banks (UCBs) as
Financially Sound and Well
Managed (FSWM)”

3. UBD.CO.LS.(PCB).Cir.No.24/ October Definition of FSWM UCBs in


07.01.000/2013-14 01, 2013 second para of circular on
“Review of norms for
classification of Financially
Sound and Well Managed
(FSWM) Urban Co-operative
Banks (UCBs)”

4. UBD.CO.LS.Cir.No.26/ November Definition of FSWM UCBs in


07.01.000 /2010-11 16, 2010 second para of circular on “UCBs
–Norms for Opening of branches
and extension counters
Liberalised”

5. UBD.CO.LS.Cir.No.25/ November Definition of FSWM UCBs in first


07.01.000/ 2010-11 16, 2010 para of circular on “Second
Quarter Review of the Monetary
Policy for 2010-11 Extension of
Area of Operation-
Liberalisation”

3
4. The following circulars contain existing Guidelines/Directions by the Reserve Bank of
India on norms for classification of UCBs as FSWM.

Sl. No. Circular No. Date Subject

1. UBD.CO.LS (PCB) October Review of norms for classification


Cir.No.20/07.01.000/2014- 13, 2014 of Urban Co-operative Banks
(UCBs) as Financially Sound and
15
Well Managed (FSWM)

2. UBD.CO.LS.(PCB).Cir.No.2 October Review of norms for classification


4/07.01.000/2013-14 01, 2013 of Financially Sound and Well
Managed (FSWM) Urban Co-
operative Banks (UCBs)

3. UBD.CO.LS.Cir.No.26/ November UCBs –Norms for Opening of


07.01.000 /2010-11 16, 2010 branches and extension counters
Liberalised

4. UBD.CO.LS.Cir.No.25/ November Second Quarter Review of the


07.01.000/ 2010-11 16, 2010 Monetary Policy for 2010-11
Extension of Area of Operation-
Liberalisation

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