New Delhi: The Reserve Bank of India (RBI) said on Tuesday that urban cooperative banks (UCBs) will be subject to the same rules as commercial banks on revealing differences in asset classification and provisioning.
The regulator changed the requirements that commercial banks must meet in order to reveal divergence from this fiscal year (FY23).
When additional provisioning for non-performing assets (NPAs) as determined by the RBI exceeds 10% of the reported profit before provisions and contingencies, or when additional gross NPAs detected by the regulator surpass 10% of the reported incremental gross NPAs, banks are required to disclose.
It allows UCBs some wiggle room because their reported incremental gross NPA threshold will be 15%. Following evaluation, this criterion will be gradually lowered for UCBs in a staggered manner, according to RBI.
Starting in FY24, the disclosure standard will be tighter. When the GNPAs determined by the RBI surpass 5% of the reported profit before provisions and contingencies, banks will be required to declare divergence.
The disclosure requirements will also take effect if the regulator identifies more GNPAs than 5% of the stated incremental gross NPAs, it was added.
