Issue and regulation of share capital and securities – State Co-operative Banks and District Central Co-operative Banks

April 19, 2022

The Chief Executive Officer
All State and Central Co-operative Banks

Madam / Dear Sir,

The Banking Regulation (Amendment) Act, 2020 (No. 39 of 2020), notified in the Gazette of India on September 29, 2020 (vide Notification No. 64 of that date), has come into force with effect from April 01, 2021 for Rural Co-operative Banks (RCBs), i.e. State Co-operative Banks (StCBs) and District Central Co-operative Banks (DCCBs).

2. The extant instructions for RCBs on issue and regulation of capital funds have been reviewed keeping in view, inter alia, the provisions of Section 12 read with Section 56 of the amended Banking Regulation Act, 1949 (BR Act).

Augmentation of capital funds

3. 3. RCBs are permitted to raise share capital, as hitherto, by way of (i) issue of shares to persons within their area of operation, in accordance with the provisions of their bye-laws, and (ii) issue of additional shares to the existing members.

4. RCBs are also permitted to issue the following instruments to augment their capital :

1. I. Preference Shares
2. 1. a. Perpetual Non-Cumulative Preference Shares (PNCPS) eligible for inclusion in Tier I capital
   2. b. Perpetual Cumulative Preference Shares (PCPS) eligible for inclusion in Tier II capital
      c. Redeemable Non-Cumulative Preference Shares (RNCPS) eligible for inclusion in Tier II capital
   3. d. Redeemable Cumulative Preference Shares (RCPS) eligible for inclusion in Tier II capital

1. II. Debt instruments
   1. a. Perpetual Debt Instruments (PDI) eligible for inclusion in Tier I capital
   2. b. Long Term Subordinated Bonds (LTSB) eligible for inclusion in Tier II capital

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Notification : https://www.dropbox.com/s/7s0iglg60mqa39k/Issue%20and%20regulation%20of%20share%20capital%20and%20securities.PDF?dl=0