Documente Academic
Documente Profesional
Documente Cultură
Distribution of UCBs
Regional Office 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Guwahati Thiruvanathapuram Bhopal Kolkata Nagpur Hyderabad Bangalore Bhubaneshwar Chandigarh Ahmedabad Lucknow Jaipur Mumbai Chennai New Delhi Jammu Total UCBs in Grade II, III & IV 11 48 56 6 65 104 188 11 13 187 30 9 101 110 4 1 944 UCBs in Grade II 1 (4) 9 (11) 17 (28) (11) 31 (45) 44 (43) 79 (76) 5 (6) 4 (1) 50 (50) 8 (13) 2 (10) 32 (128) 19 (32) 1 (1) 1 () 303 UCBs in Grade III 4 (4) 31 (28) 26 (17) (3) 20 (43) 34 (18) 97 (85) 6 (3) 5 (1) 85 (67) 14 (9) 5 (3) 49 (84) 76 (39) 2 (1) 0 (2) 454 UCBs in Grade IV 6 (4) 8 (11) 13 (14) 6 (7) 14 (33) 26 (15) 12 (46) 0 (4) 4 (4) 52 (43) 8 (8) 2 (1) 20 (71) 15 (7) 1 (2) 0 () 187 Figures in bracket are for 2006
Role of RBI
Regulatory, Supervisory, Operational and Developmental Functions (Carried out through the Urban Banks Department) RBI derives authority to control and supervise the urban banks through the Banking Regulation Act, 1949 (As Applicable to Cooperative societies)
Lack of professionalism Political interference Unlicensed UCBs Low level of computerisation No Central recruitment Faulty recruitment system / excess staff / poor skill upgradation Low level of operational efficiency High operating cost
Supervision of UCBs
Large number of banks On-site inspection in two years time frame System is under severe strain to maintain the schedule Need for off-site surveillance
Other issues
Financially unsound banks Unlicensed banks in Kerala Recent transactions by UCBs in Government Securities
Statutory Provisions
RBI does not have any powers to: -Appoint or remove the members of the board of management of urban banks -Initiate amalgamation of two urban banks -Appoint auditors of urban banks Matters related to banking operations are governed by directives and guidelines issued by the RBI
from banks registered under the Multi State Co-operative Societies Act (Central Act) for takeover of a bank/s registered under State Act
the position with regard to take over of a co-operative bank registered under the State Act by a co-operative bank registered under the Central Act is not clear View is that, if all concerned including administrators of the concerned Acts are agreeable to order merger/amalgamation, RBI may consider proposals on merits leaving the question of compliance with relevant statutes to the administrators of the Acts RBI will limit its examination only to financial aspects and to the interests of depositors as well as the stability of the financial system while considering such proposals
RCS / CRCS
Decision Conveyed
Acquired Bank
RBI
Pro-forma combined balance sheet of the acquiring bank as it will appear consequent on the merger Computation based on such pro-forma balance sheet of the following: Tier I Capital Tier II Capital Risk-weighted Assets Gross and Net NPAs Ratio of Tier I Capital to Risk-weighted Assets Ratio of Tier II Capital to Risk-weighted Assets Ratio of Total Capital to Risk-weighted Assets Tier I Capital to Total Assets Gross and Net NPAs to Advances Cash Reserve Ratio Statutory Liquidity Ratio
Information certified by the valuers to understand the net realizable value of assets of the acquired bank Details to include
Method of valuation used by the valuers Information and documents on which the valuers have relied and the extent of the verification, if any, made by the valuers to test the accuracy of such information If the valuers have relied upon projected information, the names and designations of the persons who have provided such information and the extent of verification, if any, made by the valuers in relation to such information Details of the projected information on which the valuers have relied Detailed computation of the realizable value of assets of the acquired bank
In all cases of merger/ amalgamation the financial parameters of the acquirer bank post merger should conform to the prescribed minimum prudential and regulatory requirement for UCBs The realizable value of assets has to be assessed through a process of due diligence
Amortisation of Losses
Mid-Term Review of Annual Policy Statement for the year 2005-06
in order to smoothen the process of merger in the UCB Sector, the acquirer UCB was permitted to amortise the loss taken over from the acquired UCB over a period of not more than five years, including the year of merger Issued vide UBD circular dated November 22, 2005
Amortisation of Goodwill
Where the consideration, if any, paid for the acquisition/amalgamation exceeds the book value of the net assets taken over, the excess amount should be treated as goodwill and amortized over a period of five years in equal installments Where no consideration is paid but the book value of the assets is less than the book value of liabilities taken over, the excess of the book value of liabilities over the book value of the assets taken over will be considered as goodwill and amortized over a period of five years in equal installments Where no consideration is paid, but the book value of the assets taken over is greater than the book value of the liabilities taken over, the excess of the book value of assets over the book value of the liabilities will be considered as Capital Reserve