Question : Which one of the following statement is true regarding System-based asset classification ?
(a)It refers to asset classification (downgrading as well as upgrading) carried out by computerized systems of a bank in an automated manner
(b)RBI asked urban co-operative banks (UCBs) with assets of ₹250 crore or more to implement system-based asset classification from 30 June 2021
(c) RBI asked urban co-operative banks (UCBs) with assets of ₹500 crore or more to implement system-based asset classification from 30 June 2021
(d) None of the above
Answer : (a)
Related facts
- RBI has recently(12 August 2020) asked urban co-operative banks (UCBs) with assets of ₹2,000 crore or more to implement system-based asset classification from 30 June 2021.
SBAC(System-based asset classification)
- It refers to asset classification (downgrading as well as upgrading) carried out by computerized systems of a bank in an automated manner.
Objective
- In order to improve the efficiency, transparency and integrity of the asset classification process, it has been decided to implement system-based asset classification1 in urban co-operative banks (UCBs). The relevant instructions in this regard are as under:
1) UCBs having total assets of ₹2000 crore or above as on March 31, 2020 shall implement system-based asset classification with effect from June 30, 2021.
2) UCBs having total assets of ₹1000 crore or above but less than ₹2000 crore as on March 31, 2020 and having self-assessed themselves as being under Level III or Level IV shall implement system-based asset classification with effect from September 30, 2021.
3) UCBs which meet the above criteria as at the end of the current or subsequent financial years shall implement system-based asset classification within a period of six months from the end of the financial year concerned.
4) For smooth implementation of the system, all concerned UCBs may conduct pilot/parallel run and evaluate the results for accuracy/integrity of the asset classification in compliance with the applicable RBI instructions so as to ensure that they are ready for implementation of the system-based asset classification from the appointed date.
5) UCBs not meeting the above criteria are also encouraged to voluntarily implement the system-based asset classification in their own interest.
By — Pankaj Pandey.
Link:
https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11948&Mode=0