MANU/RMIC/0162/2016

Ministry : Reserve Bank of India

Department/Board : Department of Co operative Banking Regulation

Circular No. : DCBR.BPD.(PCB).BC.No.3/12.05.001/2016-2017
                   RBI/2016-2017/57

Date : 01.09.2016

Notification/ Circulars Referred : Circulars UBD.CO.LS (PCB) Cir.No.20/07.01.000/2014-15 MANU/RMIC/0186/2014;DCBR. CO.LS (PCB) Cir.No.4/07.01.000/2014-15 MANU/RMIC/0045/2015

Citing Reference:
Circulars UBD.CO.LS (PCB) Cir.No.20/07.01.000/2014-15 MANU/RMIC/0186/2014  Referred

DCBR. CO.LS (PCB) Cir.No.4/07.01.000/2014-15 MANU/RMIC/0045/2015  Referred

The Chief Executive Officers
Salary Earners Primary (Urban) Co-operative Banks

Dear Sir/Madam,

Advances against Term Deposits of Non-members

In terms of our circular UBD.No.BL.(SEB)5A/07.01.00-2001/02 dated August 8, 2001, Salary Earners' Primary (Urban) Co-operative Banks (SEBs) applying for permission to open branches should ensure, inter alia, that their byelaws do not contain provisions for giving loans to outsiders (non-employees) by enrolling them as members / nominal members.

2. Pursuant to the deliberations in the 32nd Standing Advisory Committee meeting held on December 14, 2015, it has been decided to permit SEBs to grant advances against term deposits of non-members, subject to the following conditions:

(i) The SEB should be fulfilling all the criteria for financially sound and well managed (FSWM) UCBs laid down in our circulars UBD.CO.LS (PCB) Cir.No.20/07.01.000/2014-15 and DCBR. CO.LS (PCB) Cir.No.4/07.01.000/2014-15 dated October 13, 2014 and January 28, 2015 respectively.

(ii) The SEB should have in place an Audit Committee of the Board of Directors which is constituted and functioning in compliance with the instructions contained in our circular UBD.No.Plan.(PCB).9/09.06.00-94/95 dated July 25, 1994.