March 23, 2021
Master Direction – Amalgamation of Urban Cooperative Banks, Directions, 2020
In exercise of powers conferred by Section 35A and Section 44A read with Section 56 of the Banking Regulation Act,1949, as amended vide Banking Regulation (Amendment) Act, 2020 (39 of 2020), the Reserve Bank of India being satisfied that it is necessary and expedient in public interest so to do, hereby issues the Directions hereinafter specified.
CHAPTER – I
PRELIMINARY
- 1. Short Title and Commencement
(a) These Directions shall be called the Reserve Bank of India (Amalgamation of Urban Cooperative Banks) Directions, 2020.
(b) These directions shall come into effect on the day it is placed on the official website of the Reserve Bank of India (RBI).
2. Applicability
The provisions of these Directions shall apply to all Primary (Urban) Co-operative Banks
3. Definitions
(i) In these Directions, unless the context otherwise requires, the terms herein shall bear the meanings assigned to them below –
(a) “Amalgamated Bank” means the UCB which proposes to transfer its business to another UCB under the scheme of amalgamation.
(b) “Amalgamating Bank” means the UCB which is to acquire the business of the amalgamated bank under the scheme of amalgamation.
(c) “Amalgamation” means one or more UCBs amalgamating with another UCB under the procedure in accordance with Section 44A read with Section 56 of Banking Regulation Act, 1949
(d) “Urban Co-operative Banks (UCBs)” means Primary Cooperative Banks as defined under section 5(ccv) read with Section 56 of Banking Regulation Act, 1949 and includes both uni and multi-State banks.
(ii) All other expressions unless defined herein shall have the same meaning as have been assigned to them under the Banking Regulation Act, 1949 or the Reserve Bank of India Act, 1934 or as used in commercial parlance, as the case may be
4. Scope
(a) These guidelines shall cover amalgamation of two or more UCBs.
(b) Reserve Bank of India may consider proposals for merger and amalgamation in the following circumstances:
(i) When the net worth of the amalgamated bank is positive and the amalgamating bank assures to protect entire deposits of all the depositors of the amalgamated bank.
(ii) When the net worth of amalgamated bank is negative and the amalgamating bank on its own assures to protect deposits of all the depositors of the amalgamated bank.
(iii) When the net worth of the amalgamated bank is negative and the amalgamating bank assures to protect the deposits of all the depositors of the amalgamated bank with the financial support from the State Government extended upfront as part of the process of merger
5. Statutory Provisions
The Reserve Bank has discretionary powers to approve the voluntary amalgamation of UCBs under the provisions of Section 44A read with Section 56 of the Banking Regulation Act, 1949 as amended vide Banking Regulation (Amendment) Act 2020 (39 of 2020).
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