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With reference to the Four-tiered Regulatory Framework for Urban Co-operative Banks (UCBs), consider the following statements:
1. The RBI has categorised all unit UCBs and salary earners' UCBs (irrespective of deposit size), and all other UCBs having deposits up to ₹100 crore in Tier 1.
2. UCBs with deposits more than ₹10,000 crore have been categorised in Tier 2.
Which of the statements given above is/are correct?
  • a)
    1 only
  • b)
    2 only
  • c)
    Both 1 and 2
  • d)
    Neither 1 nor 2
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
With reference to the Four-tiered Regulatory Framework for Urban Co-op...
The Reserve Bank of India (RBI) recently announced a four-tiered regulatory framework for categorisation of Urban Co-operative Banks (UCBs).
  • According to RBI, such framework is needed to balance the spirit of mutuality and co-operation more prevalent in banks of smaller sizes and those with limited area of operation vis-a-vis the growth ambitions of the large-sized UCBs and undertake more complex business activities.
  • Based on size of deposits of the UCBs, the four-tiered regulatory framework will come into force with immediate effect.
  • The extant regulatory framework classifies UCBs into two tiers – Tier I and Tier II.
    • The RBI has categorised all unit UCBs and salary earners' UCBs (irrespective of deposit size), and all other UCBs having deposits up to ₹100 crore in Tier 1.
    • In Tier 2, it has placed UCBs with deposits more than ₹100 crore and up to ₹1,000 crore.
    • Tier 3 will cover banks with deposits more than ₹1,000 crore and up to ₹10,000 crore.
    • UCBs with deposits more than ₹10,000 crore have been categorised in Tier 4.
  • Net worth and capital adequacy:
    • RBI also has come out with norms pertaining to the net worth and capital adequacy of these banks.
    • Tier 1 UCBs operating in a single district should have minimum net worth of ₹2 crore.
    • For all other UCBs (in Tier 1, 2 and 3) tiers), the minimum net worth should be ₹5 crore.
    • The UCBs, which currently do not meet the revised minimum net worth requirement, will have to achieve the minimum net worth of ₹2 crore or ₹5 crore (as applicable) in a phased manner.
  • Minimum capital to risk weighted assets ratio:
    • The central bank also prescribed minimum capital to risk weighted assets ratio requirement for UCBs.
    • Tier 1 UCBs have to maintain a minimum capital to risk weighted assets ratio of 9 per cent of Risk Weighted Assets (RWAs) on an ongoing basis.
    • Tier 2 to 4 UCBs have to maintain a minimum capital to risk weighted assets of 12 per cent of RWAs on an ongoing basis.
Hence only statement 1 is correct.
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With reference to the Four-tiered Regulatory Framework for Urban Co-operative Banks (UCBs), consider the following statements:1. The RBI has categorised all unit UCBs and salary earners UCBs (irrespective of deposit size), and all other UCBs having deposits up to 100 crore in Tier 1.2. UCBs with deposits more than 10,000 crore have been categorised in Tier 2.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer?
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With reference to the Four-tiered Regulatory Framework for Urban Co-operative Banks (UCBs), consider the following statements:1. The RBI has categorised all unit UCBs and salary earners UCBs (irrespective of deposit size), and all other UCBs having deposits up to 100 crore in Tier 1.2. UCBs with deposits more than 10,000 crore have been categorised in Tier 2.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about With reference to the Four-tiered Regulatory Framework for Urban Co-operative Banks (UCBs), consider the following statements:1. The RBI has categorised all unit UCBs and salary earners UCBs (irrespective of deposit size), and all other UCBs having deposits up to 100 crore in Tier 1.2. UCBs with deposits more than 10,000 crore have been categorised in Tier 2.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With reference to the Four-tiered Regulatory Framework for Urban Co-operative Banks (UCBs), consider the following statements:1. The RBI has categorised all unit UCBs and salary earners UCBs (irrespective of deposit size), and all other UCBs having deposits up to 100 crore in Tier 1.2. UCBs with deposits more than 10,000 crore have been categorised in Tier 2.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer?.
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