Earlier, urban co-operative banks were allowed to trade in government securities on the stock exchanges, but were not permitted to undertake short selling
The Reserve Bank of India (RBI) has allowed urban cooperative banks to undertake short selling of government bonds on an intra-day basis.
“It has been decided to permit well-managed urban cooperative banks, who are members of negotiated dealing system-order matching (NDS-OM) and have regular concurrent audit of their treasury operations, to undertake intra-day short selling of government securities,” said RBI in a notification on Wednesday.
Earlier, urban co-operative banks were allowed to trade in government securities on the stock exchanges, but were not permitted to undertake short selling of government securities, even on an intra-day basis.
RBI has laid down three conditions for urban cooperative banks to undertake these transactions.
The urban cooperative bank should have an NDS-OM membership, a net worth of Rs 25 crore, capital-to-risk weighted assets ratio (CRAR) of 9% or more and net non-performing asset (NPA) of not more than 3%.
Besides, banks should have followed sound risk management practices and mandatory concurrent audit of their treasury operations, RBI said.
The Reserve Bank of India (RBI) has allowed urban cooperative banks to undertake short selling of government bonds on an intra-day basis.
“It has been decided to permit well-managed urban cooperative banks, who are members of negotiated dealing system-order matching (NDS-OM) and have regular concurrent audit of their treasury operations, to undertake intra-day short selling of government securities,” said RBI in a notification on Wednesday.
Earlier, urban co-operative banks were allowed to trade in government securities on the stock exchanges, but were not permitted to undertake short selling of government securities, even on an intra-day basis.
RBI has laid down three conditions for urban cooperative banks to undertake these transactions.
The urban cooperative bank should have an NDS-OM membership, a net worth of Rs 25 crore, capital-to-risk weighted assets ratio (CRAR) of 9% or more and net non-performing asset (NPA) of not more than 3%.
Besides, banks should have followed sound risk management practices and mandatory concurrent audit of their treasury operations, RBI said.
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