RBI publishes draft circular to allow UCBs to raise capital

The Reserve Bank released a draft policy on Wednesday that would allow city primary credit union banks (UCBs) to raise capital through the issuance of stocks, preferred stocks and debt. His area of ​​activity was registered as a member and also through additional capital shares to the existing members.
UCBs are drafted to be able to receive Tier I and TierII capital by issuing non-cumulative perpetual preferred stock (PNCPS), perpetual cumulative preferred stock (PCPS), redeemable non-cumulative preferred stock (RNCPS) and redeemable cumulative preferred stock (RCPS). ).
UCBs can also issue Perpetual Debt Instruments (PDI), which can be included in TierI capital, and Long Term Subordinated Bonds (LTSB) as TierII capital.
The Banking Regulation Act (Amendment Act 2020) came into force on June 29, 2020 for cooperative primary banks (Urban) (UCB).
In light of the changes required by the amendments, the Reserve Bank of India has issued a draft circular on the “Issuance and Regulation of Equity and Securities of Primary Credit Union (Urban)”. Participants and other stakeholders before August 31, 2021.

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