URBAN COOPERATIVE BANK - ECONOMY
News: Cooperative banks will soon be able to compromise settlements,
write-offs on NPAs
What is in the news?
●
Aiming to strengthen
1,514 urban co-operative banks, the Reserve Bank has notified four key
measures.
Key takeaways from the news:
1. New branches:
●
In order to expand their
business, UCBs can now open new branches
up to 10 percent (maximum 5 branches) of the number of branches in the
previous financial year without prior approval of RBI in their approved area of
operation.
2. Write off of NPA:
●
Co-operative banks
through board-approved policies may provide a process for technical write-off as well as settlement with borrowers.
3. Priority Sector Lending:
●
The RBI has decided to
extend the timeline for UCBs to achieve Priority Sector Lending (PSL) targets
by two years i.e. up to March 31, 2026.
●
The deadline to achieve
the PSL target of 60 percent, which
was March 31, 2023, has also been extended to March 31, 2024.
4. Settlements:
●
UCBs can also do One-Time Settlement at par with commercial
banks.
●
The One-time Settlement
(OTS) tool is used by lenders to recover dues from individuals with a default
payment history.