The Reserve Bank of India on Monday announced a revised supervisory action framework (SAF) for urban co-operative banks (UCBs) which sets certain thresholds.

In a notification issued on Monday, the RBI said it was coming out with a new framework for expeditious resolution of entities under financial stress. This is yet another action from the regulator following the scam at PMC Bank.

Last month, the RBI had proposed stricter rules for UCBs as part of which it sought to restrict the exposure of these lenders to a single entity and a group of connected borrowers to 10 per cent and 25 per cent, respectively.

While the revised SAF will be implemented with immediate effect, the RBI disclosed that supervisory action will be initiated on the basis of the financial position of UCBs as assessed during the statutory inspection.

The apex bank, however, added that action may also be taken on the basis of the reported or audited financial position. Supervisory action will primarily be taken on the criteria cited under the revised SAF.

However, the RBI will take appropriate supervisory action in case stress is noticed in other important indicators or parameters or in the case of serious governance issues.

The RBI has set triggers in the areas of asset quality, profitability and capital to risk weighted assets ratio (CRAR).

For instance, with regard to bad loans, a UCB may be placed under SAF if its net non-performing assets exceed 6 per cent of its net advances. Depending on the severity of stress, the RBI may take various actions.

Meanwhile, Bank of Maharashtra has reduced its marginal cost of funds based lending rates by up to 45 basis points across various tenors, effective from January 7.