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RBI revises guidelines for acquisition of weak urban cooperative banks by commercial banks

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Acquiring bank will not incur any loss arising out of merger/ transfer of assets and liabilities

The Reserve Bank of India has modified the existing guidelines for transfer of assets and liabilities of urban cooperative banks (UCBs) to commercial banks by stipulating the conditions that the acquiring bank should not incur any loss arising out of merger/ transfer of assets and liabilities of UCBs. The revised guidelines require that big depositors holding deposits in excess of Rs 1.00 lakh each will sacrifice in proportion to the deposit erosion of the target bank.

The revision in guidelines was undertaken with a view to facilitate 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 in a transparent manner without affecting the financial health of the acquiring entities and the banking system as a whole.

 

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First Published: Sep 03 2014 | 7:10 PM IST

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