Guidelines for transfer of Assets and Liabilities of Urban Cooperative Banks to Commercial Banks- Modification

RBI/2014-15/206
UBD. CO. BPD. PCB. Cir. No. 12 /09.19.900/2014-15

September 3, 2014

The Chief Executive Officer
All Primary (Urban) Cooperative Banks

Madam/ Dear Sir,

Guidelines for transfer of Assets and Liabilities of Urban Cooperative Banks to Commercial Banks- Modification

Please refer to our circular UBD.BPD.(PCB).Cir.No.47/09.16.900/2009-10 dated February 24, 2010 on guidelines for transfer of Assets and Liabilities of Urban Co-operative Banks (UCBs) to Commercial Banks.

2. With a view to ensuring that the process of consolidation by way of non-disruptive exit of weak entities by a scheme of transfer of assets and liabilities of UCBs to commercial banks is undertaken in a transparent manner without affecting the financial health of the acquiring entities and the banking system as a whole, it has been decided to modify the existing guidelines for transfer of assets and liabilities of UCBs to commercial banks by stipulating the following conditions:

a) The acquiring bank should not incur any loss arising out of the said merger/ transfer of assets and liabilities.

b) Big depositors holding deposits in excess of ` 1.00 lakh each will be required to sacrifice in proportion to the deposit erosion of the target bank.

3. In view of this, paragraphs 2.3 to 2.9 of Annex I to the circular dated February 24, 2010 regarding initial/ additional contribution to be made by the transferee bank stand modified to that extent.

Yours faithfully,

(A K Bera)
Principal Chief General Manager