Consider the following statement about new regulatory

Solution

The Reserve Bank of India (RBI) prescribed a four-tier regulatory structure for urban cooperative banks (UCBs). The regulator has stipulated a minimum net worth of ₹2 crore for tier one UCBs operating in a single district and ₹5 crore for all other UCBs of all tiers. RBI also retained the minimum capital adequacy ratio requirement for tier one banks at the present level of 9%. For urban cooperative banks of all other tiers, while retaining the current capital adequacy framework, RBI said it has decided to revise the minimum capital adequacy ratio to 12% to strengthen their capital structure. In February 2021, RBI constituted the committee headed by former deputy governor N S Vishwanathan to examine issues in the urban cooperative banking sector, provide a medium-term road map and suggest measures for faster resolution of UCBs, among others. Co-operative Banks, which are distinct from commercial banks, were born out of the concept of co-operative credit societies where members from a community group together to extend loans to each other, at favourable terms. Co-operative Banks are broadly classified into Urban and Rural co-operative banks based on their region of operation. Capital to Risk (Weighted) Assets Ratio (CRAR) is also known as Capital adequacy Ratio, the ratio of a bank's capital to its risk. The RBI tracks a bank's CAR to ensure that the bank can absorb a reasonable amount of loss and complies with statutory Capital requirements.