IIBF UCB Certificate key terms

A co-operative credit institution registered under State or Multi-State Co-operative Societies law that serves urban and semi-urban members, licensed by the RBI to accept demand deposits and lend.

A voluntary association of persons registered under co-operative law who pool resources for mutual benefit, governed by the principles of one-member one-vote and limited return on capital.

A society whose objectives extend to more than one State, registered under the Multi-State Co-operative Societies Act and regulated at the central level rather than by a single State registrar.

The authorisation the Reserve Bank of India grants a co-operative society under Section 22 of the Banking Regulation Act to carry on banking business, subject to conditions and cancellation.

The statute regulating banking in India, extended to co-operative societies as applicable to co-operative societies, covering licensing, management, capital, audit and RBI powers over UCBs.

The arrangement under which a UCB is supervised by both the State or Central Registrar for co-operative law matters and the Reserve Bank of India for banking matters.

The official who registers co-operative societies, oversees their elections, audits and amendments to bye-laws, and can supersede boards under State co-operative law.

A UCB included in the Second Schedule to the Reserve Bank of India Act, which must meet prescribed capital and business criteria and gains access to RBI facilities.

A licensed UCB that is not listed in the Second Schedule to the RBI Act and therefore lacks the privileges available to scheduled banks, such as certain refinance access.

The co-operative principle that each member has a single vote regardless of the number of shares held, limiting control by large shareholders and preserving mutual character.

The criteria a person must satisfy to join a UCB, typically residence or work within its area of operation, and the grounds on which membership may be refused or ceased.

The geographical territory defined in a UCB's bye-laws within which it may admit members and conduct business, and which limits expansion without regulatory approval.

The shared link, such as locality, occupation or community, that connects members of a co-operative and defines who may be admitted to membership.

The body a UCB constitutes under the Banking Regulation Act, consisting of persons with banking expertise, which oversees the bank alongside the elected board of directors.

The elected governing body of a UCB, chosen by members, responsible for policy direction and accountable to the general body and the regulator.

The standards the RBI applies to directors and senior managers of a UCB, covering integrity, reputation, financial soundness and absence of adverse regulatory or criminal findings.

The minimum experience and educational requirements the RBI expects of the chief executive and key functionaries of a UCB, including banking or financial-sector experience.

The full-time professional head of a UCB, appointed by the board with regulatory approval and responsible for day-to-day operations and compliance with RBI directions.

The aggregate of paid-up capital, reserves and surplus less intangible assets and accumulated losses, used to measure a UCB's capital strength against regulatory thresholds.

The ratio of a UCB's capital to its risk-weighted assets, showing whether it holds enough capital for the credit, market and operational risks it carries.

On-balance-sheet and off-balance-sheet exposures multiplied by regulatory risk weights, giving a measure of credit and other risk used in capital adequacy computation.

The core capital of a UCB, mainly paid-up share capital and disclosed reserves net of specified deductions, which absorbs losses without the bank being wound up.

The requirement that a UCB maintain capital at or above prescribed levels relative to risk, framed to protect depositors and the stability of the banking system.

The obligation on a UCB to lend a prescribed share of its advances to specified sectors such as agriculture, micro-enterprises, housing and weaker sections.

A category within priority sector lending covering disadvantaged groups such as scheduled castes and tribes, and certain low-income households, for which lending targets apply.

The maximum share of a UCB's total loans that may be lent to a single borrower or group, expressed as a multiple of the bank's net owned funds.

The limits the RBI sets on a UCB's credit exposure to a single borrower, a group of connected borrowers, or specified sectors, measured against its capital base.

The cap on total credit a UCB may extend to one borrower, computed as a percentage of net owned funds and applied to both fund-based and non-fund-based facilities.

Paid-up capital plus reserves less intangible assets and accumulated losses, adjusted for investments in subsidiaries, used as the base for exposure and lending limits.

The minimum share of a UCB's net demand and time liabilities that must be held in cash, gold or approved securities before lending, prescribed under RBI directions.

The portion of net demand and time liabilities a UCB must keep as cash with the Reserve Bank of India, maintained on a daily and fortnightly average basis.

The total of a UCB's demand liabilities and time liabilities to the public, net of balances with other banks, forming the base for CRR and SLR requirements.

A loan or advance on which interest or principal has remained overdue for more than ninety days, requiring classification, provisioning and income recognition changes.

An NPA that has remained non-performing for a period up to twelve months, attracting a higher provisioning requirement than a standard asset.

An NPA that has remained sub-standard for more than twelve months, classified further by the length of the period and secured status for provisioning purposes.

The rules requiring a UCB to set aside specified amounts against standard, sub-standard, doubtful and loss assets, charged to the profit and loss account.

The rules on when a UCB may recognise interest and other income, under which income on non-performing assets is generally not recognised until actually received.

Protection provided by the Deposit Insurance and Credit Guarantee Corporation to depositors of a UCB up to a prescribed limit per depositor per bank if the bank fails.

A fund maintained by the RBI into which unclaimed deposits of a UCB that have remained inoperative for ten years are transferred for depositor education and awareness.

A deposit account with no customer-induced transaction for a specified period, which a UCB must classify, notify and handle under unclaimed deposit rules.

The process by which a UCB verifies a customer's identity and address, assesses risk and monitors transactions to prevent money laundering and terrorist financing.

The laws, rules and internal controls a UCB must follow to detect and report suspicious transactions and to prevent use of the bank for laundering criminal proceeds.

A report a UCB must file with the Financial Intelligence Unit when it suspects that a transaction involves proceeds of crime or is otherwise unusual.

The RBI approval a UCB needs to open, shift or close a branch or extension counter, granted with reference to its financial health and area of operation.

The annual audit of a UCB's accounts conducted by a qualified auditor appointed with regulatory approval, whose report is placed before the general body.

An ongoing, transaction-level audit performed alongside operations to test compliance with internal policies and regulatory requirements, distinct from the year-end statutory audit.

The policies, procedures and checks a UCB puts in place to safeguard assets, ensure accurate records and secure compliance with laws and management instructions.

A committee of the board that reviews internal and statutory audit findings, monitors internal controls and oversees the financial reporting process of the UCB.

The process of managing a UCB's assets and liabilities to control interest rate, liquidity and maturity mismatches within board-approved limits and regulatory guidelines.

The risk that a UCB cannot meet its obligations as they fall due without incurring unacceptable losses, managed through liquid assets and funding diversification.

The exposure of a UCB's earnings and capital to changes in interest rates, arising from mismatches in the repricing of assets and liabilities.

The risk that a borrower or counterparty fails to meet obligations to the UCB, addressed through appraisal standards, collateral, limits and provisioning.

The RBI framework under which corrective action is triggered for a UCB showing weak capital, asset quality or profitability, with graduated restrictions on business.

A structured early-intervention regime imposing capital, lending and branch restrictions on a bank whose financial indicators breach specified trigger points.

The merger of a weak UCB into a stronger one, typically arranged or approved by the RBI and the registrar, to protect depositors and preserve banking services.

The loans and credit facilities a UCB extends to its members and other eligible borrowers, forming its principal earning asset and main source of credit risk.

Holdings of government securities, bonds and other approved instruments in a UCB's portfolio, classified into statutory and non-statutory categories for SLR and income purposes.

A category of a UCB's investment portfolio intended to be held until maturity, for which amortised cost accounting applies and mark-to-market losses are not recognised.