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Off-site Surveillance System for Primary (Urban) Co-operative Banks

Reserve Bank of India has extended the off-site surveillance system (OSS) to all non-scheduled urban co-operative banks (UCBs) having deposit size of Rs 100 crore and above. The decision to extend OSS to all non-scheduled UCBs has been taken following the stabilisation of this system in scheduled UCBS.

A supervisory reporting system was introduced for the scheduled Primary (Urban) Co-operatives banks with effect from March 31, 2001, as a first step towards setting up of a system for Off-site Surveillance (OSS) of all urban co-operative banks (UCBs).

2. The OSS reporting system comprises a set of 8 returns, of which, the periodicity of one return, viz. Bank Profile Statement (Return No. 8) is annual and the rest 7 are required to be submitted at quarterly intervals.

3. The OSS Returns would come into effect from quarter ended June 30, 2004. In order to facilitate smooth transition / operationalisation of the new set of returns, the period of one month for submission of the returns would be implemented gradually from the quarter ended December 2004 onwards.

4. Prudential concerns monitored through these returns include aspects relating to solvency, liquidity, capital adequacy, asset quality/portfolio risk profile, connected or related lending and concentration of exposures of the supervised institutions.

While the main objective of the reporting system is to obtain information on areas of prudential interest and monitor regulatory compliance, the OSS returns are also designed to address the management information needs and strengthen MIS within the reporting institutions. A collateral objective of the reporting system is to sensitize managements of banks to concerns of the supervisory authority and thereby also help in self-regulation.

5. The Off-site Surveillance Returns are required to be approved by the Board of Directors / Chief Executive Officer of the bank and sent to the Officer-in-Charge of Urban Banks Department (UBD) of the Regional Office of RBI, which has supervisory jurisdiction over the bank and to which the bank submits other regulatory returns.

The OSS returns may be submitted in hard copy along with a floppy containing the returns. It may be noted that RBI attaches utmost importance to this reporting system and expects banks to submit the OSS returns to UBD correctly compiled and within the prescribed time.

To this end, banks may designate and authorise one or two senior official/s who would be responsible for the correct compilation and timely submission of these returns and who would be fully responsible for the information furnished therein. Such designated Authorised Reporting Official/s (ARO/s) would have to liase with the officials in the Off-site Surveillance (OSS) Division of UBD. The names and designations of the ARO/s may be indicated to the concerned Regional Office of UBD while forwarding the OSS returns.

6. While the information provided in the supervisory returns would be subject to post-facto verification during on-site inspection by RBI and by external auditors, it would form the basis, in the interregnum, for supervisory attention and dialogue with bank managements. The importance of accuracy and timeliness of reporting therefore needs no emphasis. The banks may be penalised for furnishing wrong information to RBI.

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