RBI Draft ECBA Norms for Urban Co-op Bank Expansion
Why in the news
The RBI proposed a new yardstick, ECBA, to decide when Urban Co-operative Banks may expand, replacing the older Financially Sound and Well Managed (FSWM) test.
Key facts
- Applies to approvals for new branches, ATMs, processing centres and infrastructure of UCBs.
ECBA eligibility conditions
| Area | Requirement |
|---|---|
| Capital | Meet minimum regulatory CAR |
| Asset quality | Net NPAs not above 3% |
| Profitability | Net profit in the previous two financial years; no accumulated losses |
| Liquidity | No CRR or SLR default recently |
| Technology | Core Banking Solutions fully implemented |
| Governance | At least two professional directors |
| Regulatory status | Not under RBI directions, SAF or PCA |
Compliance process
- Verified yearly on audited accounts as of 31 March; board resolution, then RBI told within 15 days.
- Valid up to 30 September of the next financial year.
Exam angle
- ECBA replaces FSWM for UCBs; net NPA ceiling 3%.