Reserve Bank of India (RBI) has issued notification number RBI/2017-18/47 DCBR.BPD.PCB.Cir.No.03/09.18.300/2017-18 dated 16th August, 2017 for core banking solution (CBS) requirements for Urban Co-operative Banks (UCBs).
RBI circular DCBR.CO.PCB.Cir.No.14/09.18.300/2015-16 dated April 13, 2016 announced the Scheme for providing financial assistance to UCBs for implementation of CBS.
It was mentioned in that circular that a scheme for providing financial assistance to UCBs for implementation of CBS has been formulated in consultation with Institute for Development and Research in Banking Technology (IDRBT) and would be implemented by IDRBT/Indian Financial Technology and Allied Services (IFTAS) (a subsidiary of IDRBT).
Key highlight of the scheme is as follows:
UCBs which have not yet implemented CBS or partially implemented CBS will be eligible for financial assistance under the scheme. UCBs which are under directions imposed under Section 35A of Banking Regulation Act, 1949 (AACS) will not be eligible.
IDRBT will be the implementing agency for implementation of CBS in eligible UCBs, herein after called the Implementing Agency (IA).
Cost of package
The cost of the migration to CBS for a bank will be Rs. 4/- lakhs. Thereafter, the recurring cost will be Rs. 15,000/- per branch per month and the cost also includes redundant net work connectivity. The recurring cost would be subject to review from time to time.
Quantum of Financial Assistant from Reserve Bank of India
Reserve Bank of India will reimburse the cost of migration of the UCBs to CBS amounting to Rs. 4/- lakhs to IA on successful completion of preliminary study and data validation. The recurring cost of Rs. 15,000/- per branch per month will be borne by the UCB.
As stated in that circular, a document dealing with the functional and technical requirements for Core Banking Solution in Urban Co-operative Banks has been prepared by the IDRBT in consultation with the RBI. The document is expected to serve as a reference material for implementing and improving CBS in the banks.
Functional and technical requirements mentioned in the document, in a nutshell, are as follows:-
Deposit Accounts (Individuals, Institutions and Cooperatives)
- Customer Account Management and KYC includes Signature, photo storage and retrieval
- Suspense Account handling
- Term Deposit
- Other configurable account and deposit types like PMJDY, etc.
- Cheque issue and maintenance
- Alerts including the interface for SMS and Email. However, the commercials related to sending SMS and send/receive emails to a bank email id may be different.
- TDS includes issuance of TDS certificate to customers
- Passbook printing
Loans and Advances
- Retail, Wholesale/Corporate and Agricultural loans that includes
- Short/Medium/Long term loans with interest subvention & interest calculation with/without compounding
- Cash credit & Over Draft
- Retail Loans and related Account Operations
- Deposit Loan
- Gold Loans including for agricultural/rural development purposes
- Other loan types with configurable interest rates, payment terms, collaterals, etc.
- Security maintenance includes collateral and other documents storage and retrieval
- Asset Classification (NPA) and Restructuring Loans
- Waiver, Write-off & Legal
Remittances and Services
- Demand Draft and Pay Order Issue & Payments
- Standing Instructions
- Service Tax
- Safe Deposit Lockers
- Payment Systems and Digital Channels
- With increasing adoption of digital channels and real-time payment systems, UCBs may also obtain the CBS interfaces for SFMS (NEFT, RTGS, LC and BG) for inter-bank remittances/transfers as a direct/sub member, NFS for ATM Switch, IMPS, AEPS, etc. ECS and NACH
- Cheque Truncation System (Registration, Verification, File Generation, etc.)
- Aadhaar integration for KYC, AEPS, etc.
- SWIFT Integration for FOREX remittances
- Participation in CCIL related activities for government securities
- Bancassurance (Corporate, Agent & Referral Mode)
- Utility Bill payments
- Mobile Banking for account summary. Adding/updating beneficiary, fund transfer, etc.
- Internet Banking for account summary. Adding/updating beneficiary, fund transfer, etc.
- Financial Inclusion in Online mode with Aadhaar integration
UCBs should ensure applications/software being hosted are thoroughly tested and pass Vulnerability and Penetration testing done by CERT-IN/STQC approved organizations. VAPT has to be done at prescribed regular intervals/also, UCBs leveraging Cloud computing model for CBS and other IT applications can refer to the “IDRBT Cloud Security for Indian Banks” for the contract documents with the service provider. Detailed technical requirements for UCB applications are presented in the document.
The said document CBS_Requirements_for_UCBs can be viewed here.