RBI revises supervisory action framework for Primary UCBs

Reserve Bank of India has released Supervisory Action Framework tightening norms for Primary (Urban) Co-operative Banks under section 35A of the Banking Regulation Act, 1949.
Under the Norms ,if the Net Non Performing Assets of the bank exceed 6 % of its net advances,the bank will placed under the Supervisory Action Framework.
All primary UCBs are mandated to submit a board-approved action plan for reducing its net NPAs below 6% on quarterly/monthly basis, post-review progress report.
RBI also has option of putting restriction on fresh loans and advances carrying risk-weights more than 100% threshold breach.
Under the revised rules, an UCBs may be placed under the framework, if it incurs two consecutive years of losses.
RBI can advise the UCB to submit a board-approved plan to increase the CRAR(Capital to Risk-weighted Assets ratio) to 9% or above within 12 months, advise board members to keep track of progress of the plan, or restrict declaration of a dividend or payment of donation without RBI approval.
UCBs may also come under the framework when its Capital to Risk-weighted Assets ratio (CRAR) falls below 9 %.
The SAF is similar to the Prompt Corrective Action (PCA) framework which is imposed on commercial banks.