The investment by an StCB/ CCB in the share capital of SSE shall be restricted to five percent of its owned funds (paid-up share capital and reserves)
FinTech BizNews Service
Mumbai, September 27, 2025: RBI had accorded regulatory approval in April 2025 to NABARD’s proposal for setting up of a Shared Service Entity (SSE) for State Co-operative Banks (StCBs) and District Central Co-operative Banks (DCCBs), wherein it is envisaged that the StCBs and CCBs can subscribe to the share capital of the SSE on a voluntary basis. In this context, there is a need felt by the RBI to suitably review the extant instructions on investment in non-SLR instruments by StCBs/ CCBs. The RBI had issued a circular dated July 14, 2016 (hereinafter called the extant instructions), on Investments in Non-SLR instruments by State / Central Co-operative Banks. The circular, inter alia, specified the permissible non-SLR instruments, the prudential limit on a bank’s total non-SLR investments, and restriction on its investment in unlisted non-SLR securities.
Accordingly, the relevant instructions have been reviewed and are being amended vide Reserve Bank of India (Investments in Non-SLR instruments by State / Central Co-operative Banks) Directions, 2025. In exercise of the powers conferred by Section 35A read with Section 56 of the Banking Regulation Act, 1949 (hereinafter called the Act) and all other laws enabling the Reserve Bank of India (hereinafter called the Reserve Bank) in this regard, the Reserve Bank, being satisfied that it is necessary and expedient in the public interest to do so, hereby, issues the Directions hereinafter specified.
3. (i) These Directions shall be called the Reserve Bank of India (Investments in Non-SLR instruments by State / Central Co-operative Banks) Directions, 2025.
(ii) These Directions shall be effective immediately.
4. These Directions modify the extant instructions as under:
(i) After paragraph 2.2(c) of the circular, the following paragraph 2.2(d) shall be inserted, namely: -
“2.2(d) Share capital of Shared Service Entity (SSE) set up by NABARD for StCBs and CCBs.”
(ii) After paragraph 2.3(i) of the circular, the following paragraph 2.3(j) shall be inserted, namely: -
“2.3(j) The investment by an StCB/ CCB in the share capital of SSE shall be restricted to five percent of its owned funds (paid-up share capital and reserves). Such investment, however, shall be exempt from the prudential limit on non-SLR investments specified at Para 2.1 and the restriction on investment in unlisted non-SLR investments specified at Para 2.3(d) above.”
