Master Direction - Amalgamation of Urban Cooperative Banks, Directions, 2020

Last updated: 26 March 2021

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The Reserve Bank of India has issued Master Directions for the amalgamation of Urban Co-operative Banks (UCBs). These directions, effective from their website placement, apply to all Primary (Urban) Co-operative Banks. They outline the process for merging one or more UCBs with another, including the necessary approvals from Boards and shareholders, and the information required for submission to the RBI. The directions also detail the treatment of dissenting shareholders and provide incentives for amalgamating banks.

Reserve Bank of India RBI/DOR/2020-21/75 Master Direction DOR.MAM.No.49/09.16.901/2020-21 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 Regulat

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FAQ :

These are directions issued by the Reserve Bank of India, effective from their website placement, that govern the process and requirements for the amalgamation of Urban Co-operative Banks (UCBs).

The provisions of these Directions apply to all Primary (Urban) Co-operative Banks.

The amalgamation decision must be approved by a two-third majority of the total Board members of both the amalgamating and amalgamated UCBs, not just those present and voting. They must also consider factors like asset/liability incorporation, due diligence, shareholder consideration, swap ratio fairness, shareholding patterns, and the impact on the amalgamating bank's financial health.

Shareholders of each UCB must approve the draft scheme of amalgamation by a resolution passed by a majority representing two-thirds of the shareholders, both in number and value, present in person at a specially called meeting.

Dissenting shareholders are entitled to claim the value of their shares as per the amalgamation scheme sanctioned by the Reserve Bank within 3 months of the sanction date. However, if they have outstanding dues to the UCB, they will only receive a refund after settling their dues.

Incentives may include permission to close or merge loss-making branches of the amalgamated UCB, retaining facilities like AD Category I licenses if certain CRAR is maintained, and not insisting on minimum entry point capital if the UCB becomes multi-state solely due to an out-of-state amalgamation.

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Notification No : Master Direction DOR.MAM.No.49/09.16.901/2020-21
Published in Community & General
Source : https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=12043&Mode=0

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