The Reserve Bank of India (“RBI”), vide its notification dated August 12, 2020, directed implementation of system-based asset classification in urban co-operative banks (“UCBs”), with an intent to improve efficiency, transparency and integrity of the asset classification process.
System-based asset classification refers to asset classification (downgrading as well as upgrading) carried out by computerized systems of a bank in an automated manner on an ongoing basis, based on guidelines issued by the RBI.
Key points:
Please find a copy of the notification dated August 12, 2020 here.
This update has been contributed by Suchita Ambadipudi (Partner) and Mitali Jain (Associate).
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