Rbi enables rural cooperative banks to raise funds from preferred shares and debt instruments


The Reserve Bank of India on Tuesday authorized Rural Co-operative Banks (RCBs) to raise funds from people in their area of ​​operation or existing shareholders through a variety of instruments. BCRs, which include state cooperative banks and district central cooperative banks, can raise funds from preferred stock and debt instruments, RBI said in a notification.

RBI said the review is ongoing following the RCBs under the amended Banking Regulation Act. These lenders may increase their capital through the issuance of preferred stock, which may include the issuance of non-cumulative perpetual preferred stock which may be included in the Tier I capital base. In addition, Tier I capital instruments II, including perpetual cumulative preference shares, non-cumulative redeemable preference shares and cumulative redeemable preference shares may also be used.

According to RBI, they can also raise funds through debt instruments, including perpetual debt instruments eligible for inclusion in Tier I capital and long-term subordinated bonds eligible for inclusion in Tier I capital. Tier II capital. These BRCs must comply with certain conditions, such as not using their fixed deposit rate as a reference and making the necessary disclosures prominently, in particular those indicating that the instruments through which the funds are raised are not fixed deposits.

The procedure for transfer to the legal heirs in the event of the death of the subscriber of the instrument should also be specified, RBI said.

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