The Reserve Bank of India (RBI) on Tuesday had given a nod to Rural Co-operative Banks to raise capital from people in their area of operation or existing shareholders through varied instruments.
RBI in its notification stated that Rural Co-operative Banks (RCBs) comprising of state co-operative banks and district central co-operative banks can now raise the funds from preference shares and debt instruments. It was further said in the notification that this has been done following the rural co-operative banks fall under the amended Banking Regulation Act domain.
RBI has said the RCBs can raise funds through debt instruments such as perpetual debt instruments eligible for inclusion in tier I capital and long-term subordinated bonds eligible for inclusion in tier-II capital. By issuing preference shares, these banks can increase their capital. This includes an issue of perpetual non-cumulative preference shares eligible for inclusion in core tier I capital. The banks can also use redeemable cumulative and non-cumulative preference shares.
