RBI announced four-tiered regulatory framework for urban cooperative banks

Besides, the central bank has come out with norms pertaining to the net worth and capital adequacy of these banks. 
      
The four-tiered regulatory framework, based on size of deposits of the UCBs, will come into force with immediate effect.The extant regulatory framework classifies UCBs into two tiers — Tier I and Tier II. 
      
In a circular, the RBI said given the heterogeneity in the cooperative sector, a tiered regulatory framework is required. 
      
Such a framework is needed to balance the spirit of mutuality and co-operation more prevalent in banks of smaller sizes and those with limited area of operation vis-a-vis the growth ambitions of the large-sized UCBs and undertake more complex business activities.
      
“It has been decided to adopt a four-tiered regulatory framework, as against the existing two-tiered framework, for categorisation of UCBs,” it said.