Cooperative banks to conduct foreign exchange business

Reserve Bank of India has decided that Urban Co-operative Banks (UCBs) would be eligible for Authorized Dealers (AD) Category I or II licence, to conduct foreign exchange business, subject to compliance with the norms given below. However now UCBs cannot function as FFMC.

[There are three categories of Authorized Dealers (AD) (Category I, II and III) besides Full Fledged Money Changers (FFMCs)]

Eligibility norms for AD licence

AD Category-I

a) The bank should be registered under the Co-operative Societies Act of a state which has signed MOU or under the Multi State Co-op Societies Act 2002.
b) It should be included in the Second Schedule to RBI Act 1934.
c) It should have a minimum net worth of Rs 200 crore.
d) Its CRAR should not be less than 12 %,
e) The NPAs of the bank should not exceed 10 %.
f) It should have made profit in the preceding three years.
g) It should not have defaulted in maintenance of CRR/ SLR requirements.
h) It should have sound internal control systems.
i) It should have an elected board of management with at least two professionals.

AD Category-II

a) The bank should be registered under the Co-operative Societies Act of a state which has signed MOU or under the Multi State Co-op Societies Act 2002
b) It should have a minimum net worth of Rs.10 crore
c) Its CRAR should be not less than 9%
d) Its NPAs should not exceed 10%
e) It should have made profit in the preceding three years.
f) It should not have defaulted in maintenance of CRR/ SLR requirements.
g) It should have sound internal control systems
h) It should have an elected board of management with at least two professionals.

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