RBI opens forex business to UCBs

Mumbai: The Reserve Bank of India (RBI) has allowed all urban co-operative banks (UCBs) to carry out foreign exchange business under the `authorised dealer category I or II licence'. The RBI, however, declined to allow UCBs to function as full-fledged moneychangers.

To carry out the business in Category I, the bank should be registered under the Co-operative Societies Act of a state and has signed a memorandum of understanding (MoU), or those coming under the Multi State Co-operative Societies Act, 2002.

These banks, to be included in the 'second schedule' to RBI Act 1934, should also have a minimum net worth of Rs200 crore and the CRAR of not less than 12 per cent for Category I licence, an RBI notification said.

The notification said NPAs of the bank should not exceed 10 per cent and they should have made profit in the preceding three years.

For category II licence, the banks should have a minimum net worth of Rs10crore and a CRAR of at least nine per cent. Besides, NPAs should not exceed 10 per cent, RBI said.

Until now, only certain categories of UCBs were eligible for Authorised Forex Dealer Category III licence.