Question

    What is the requirement for the implementation of Core

    Banking Solution (CBS) for a UCB to be classified as FSWM? Direction (11 to 13):-   Read the following information to answer the questions below: Given the heterogeneity in the cooperative sector, a tiered regulatory framework was required to balance the spirit of mutuality and co-operation more prevalent in banks of smaller sizes and those with limited area of operation vis-à-vis the growth ambitions of the large-sized Urban Cooperative Banks to spread their area of operation and undertake more complex business activities. The Reserve Bank of India had constituted the Expert Committee on Urban Co-operative Banks to examine the issues in urban cooperative banking sector and to review regulatory/ supervisory approach for strengthening the sector. Based on the recommendations of the Expert Committee, RBI had released the Revised Regulatory Framework for Urban Co-operative Banks (UCBs) on July 19, 2022. Accordingly, it was decided to adopt a four-tiered regulatory framework, as against the then existing two-tiered framework, for categorization of UCBs. Going forward, this categorization would be used for differentiated regulatory prescriptions aimed at strengthening the financial soundness of the UCBs.
    A Partially implemented CBS Correct Answer Incorrect Answer
    B CBS should be implemented for only certain operations Correct Answer Incorrect Answer
    C CBS should be implemented for all operations except deposit and withdrawal Correct Answer Incorrect Answer
    D CBS fully implemented Correct Answer Incorrect Answer
    E CBS should be implemented for all operations except loans and advances Correct Answer Incorrect Answer

    Solution

    According to RBI guidelines, for a UCB to be classified as FSWM, CBS should be fully implemented. This means that CBS should cover all operations and should be fully implemented.

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