The Reserve Bank on Wednesday came out with draft guidelines allowing primary urban cooperative banks (UCBs) to augment capital through issuance of equity shares, preference shares and debt instruments.
The UCBs, it said, could raise share capital by issue of equity to persons within their area of operation enrolled as members and also through additional equity shares to the existing members.
The UCBs, as per the draft, will be permitted to raise Tier-I and Tier-II capital by issuing Perpetual Non-Cumulative Preference Shares (PNCPS), Perpetual Cumulative Preference Shares (PCPS), Redeemable Non-Cumulative Preference Shares (RNCPS) and Redeemable Cumulative Preference Shares (RCPS).
The UCBs will also be allowed to issue Perpetual Debt Instruments (PDI) which will be eligible to be included in Tier-I capital and Long Term Subordinated Bonds(LTSB) as Tier-II capital.
The Banking Regulation (Amendment) Act, 2020 came into force with effect from June 29, 2020 for Primary (Urban) Co-operative Banks (UCBs).
In view of the changes mandated by the amendments, the Reserve Bank of India has released the draft circular on 'Issue and regulation of share capital and securities - Primary (Urban) Co-operative Banks'.
It has invited comments on the draft from UCBs, sector participants and other interested parties by August 31, 2021.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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