The Reserve Bank of India has issued updated directions amending its prudential framework for State Co-operative Banks and Central Co-operative Banks’ investments in non-SLR instruments, to allow them to subscribe (on a voluntary basis) to the share capital of a Shared Service Entity being set up by NABARD. The Directions add the SSE share capital to the list of permissible non-SLR instruments and cap an StCB or CCB’s investment in the SSE at five percent of its owned funds (paid-up share capital and reserves). This investment is exempt from both the overall prudential limit on non-SLR investments and the restriction on investment in unlisted non-SLR securities under the existing framework. The Directions, issued under Section 35A read with Section 56 of the Banking Regulation Act, 1949, take effect immediately.
Reserve Bank of India 2025-09-26
Reserve Bank of India permits State and Central Co-operative Banks to invest in NABARD Shared Service Entity share capital with a five percent owned-funds cap
The Reserve Bank of India amended its prudential framework to allow State and Central Co-operative Banks to invest in a Shared Service Entity by NABARD. This investment, capped at five percent of owned funds, is exempt from the prudential limit on non-SLR investments and restrictions on unlisted non-SLR securities. The updated directions are effective immediately under the Banking Regulation Act, 1949.