Reserve Bank of India (Rural Co-operative Banks - Branch Authorisation) Directions, 2025

RBI/DOR/2025-26/296 DOR.LIC.REC.No.331/07-01-000/2025-26 December 04, 2025

Reserve Bank of India (Rural Co-operative Banks - Branch Authorisation) Directions, 2025

Table of Contents

• Chapter I - Preliminary
• Chapter II - Branch Authorisation
• Chapter III - Reporting
• Chapter IV - Repeal and other Provisions
• Annex I
• Annex II
• Annex III
• Annex IV
• Annex V
• Annex VI
• Annex VII

In exercise of the powers conferred by Section 23 read with 56 of the Banking Regulation Act, 1949, the Reserve Bank of India (‘RBI’) being satisfied that it is necessary and expedient in the public interest to do so, hereby issues the Directions hereinafter specified.

Chapter I – Preliminary

A. Short Title and Commencement

1. These Directions shall be called the Reserve Bank of India (Rural Co-operative Banks - Branch Authorisation) Directions, 2025.
2. These Directions shall come into force with immediate effect.

B. Applicability 3. These Directions shall be applicable to Rural Co-operative Banks (RCBs), hereinafter collectively referred to as 'banks' and individually as a 'bank'. In this context, ‘Rural Co-operative Banks’ shall mean State Co-operative Banks (StCBs) and Central Co-operative Banks (CCBs), as defined in the National Bank for Agriculture and Rural Development Act, 1981.

C. Definitions 4. In these Directions, unless the context states otherwise, the terms herein shall bear the meanings assigned to them below: (1) ‘Area of Operation’ of a bank means the geographical area/s of operation stated in its byelaws, as approved by the registering authority and the Reserve Bank. (2) ‘Administrative Office’ or ‘Controlling Office’ means a corporate, regional, zonal, or any other office, by whatsoever name called, that exercises control or oversight functions on Branches / Offices falling under its jurisdiction and undertakes internal administrative functions including oversight of bank’s own staff and carries out no banking or business transactions. (3) ‘Back Offices’ means a Central Processing Centre (CPC) or an Office, by whatever name called, that exclusively attends to functions such as data processing, processing of loans, verification and processing of documents, issuance of cheque books, demand drafts etc. on requests received from other branches and carries out other functions incidental to banking business.

5. All other expressions, unless defined herein, shall have the same meaning as have been assigned to them under the Banking Regulation Act, 1949 or the Reserve Bank of India Act, 1934 or any statutory modification or re-enactment thereto, or Glossary of Terms published by RBI or as used in commercial parlance, as the case may be.

Chapter II – Branch Authorisation

A. Eligibility Criteria for Business Authorization (ECBA) 6. Based on a comprehensive review, it has been decided to issue harmonised eligibility criteria for banks for certain business authorizations / permissions / approvals. These criteria, as given below, will henceforth be referred to as Eligibility Criteria for Business Authorization (ECBA).

7. A bank will be considered as fully complying with ECBA if it meets the following conditions, based on the audited financial statements as of 31st March of the immediately preceding financial year:

• The CRAR should be at least one percentage point above the minimum CRAR applicable to the bank as on the reference date;
• Net NPAs of not more than 3%;
• Net profits during the preceding two financial years;
• No default in the maintenance of CRR / SLR during the preceding and current financial year till the time of Board resolution declaring the bank as ECBA compliant / application for authorization;
• Core Banking Solution (CBS) fully implemented; and
• The bank should not be under any Directions / Supervisory Action Framework / PCA of RBI / NABARD, as the case may be, at the time of Board resolution declaring the bank as ECBA compliant/ application for authorization;

8. A bank shall determine its compliance with the ECBA every year based on the audited financial statements as of 31 March of the immediately preceding FY and place it before its Board within 30 days from the date of adoption of the audit report. The Board shall satisfy itself about the compliance of the bank with ECBA and pass the necessary resolution approving the same and inform the Reserve Bank and NABARD within 15 calendar days from the date of the Board resolution as per the format given in Annex I. A bank not complying with ECBA need not inform the Reserve Bank / NABARD in this regard. The period of validity of compliance with ECBA will be considered to be till 30th September of next FY, or the date the bank is declared non-compliant with ECBA by the supervisor, or till the date of next self-review, whichever is earlier.

Example: If a bank determines itself to be in compliance with ECBA in August 2025 based on audited figures as of March 31, 2025, it would be considered compliant with ECBA till September 30, 2026; except in following cases:

• It is declared non-compliant with ECBA in the next statutory inspection (a review will be carried out by the supervisor based on assessed figures as of March 31, 2025); or
• It is declared non-compliant with ECBA (effective from the date of Board resolution) in the next self-review based on audited figures for the next financial year (in this case, as of March 31, 2026).

9. The above process is subject to review by the Reserve Bank, including supervisory review. In case during the supervisory review of NABARD, or even otherwise, if a bank, which has declared itself compliant with ECBA is found to be non-compliant, the bank shall be subject to appropriate supervisory and / or enforcement action as deemed fit by the Reserve Bank, including but not limited to debarment from self-reviewing itself as ECBA compliant for a period of minimum of one year.

B. Area of Operation of District Central Co-operative Banks (DCCBs) 10. The area of operation of DCCBs is decided by the State Government concerned by passing an order to that effect. Any change in the extant area of operation that takes place due to the splitting / reorganisation of districts is also notified by the State Government by issuing an order to that effect. Therefore, DCCBs desirous of amending their area of operation shall approach the Reserve Bank along with the notification from the State Government, a resolution passed to this effect by their Board and the amended byelaws registered with Registrar of Co-operative Societies (RCS). DCCBs do not require NOC from the Reserve Bank for amendment of byelaws in this regard and may directly approach the Reserve Bank for amendment in the banking license with the above-mentioned documents.

C. Opening of a New Place of Business 11. Prior permission from the Reserve Bank is required for opening a new place of business including Branches, Extension Counters, ATMs, Controlling Offices (Regional / Zonal /Administrative Office), Central Processing Centres, Regional Collection Centres, Retail Asset Processing Centres, Service Branches, Back Offices etc. or for changing the location of any existing place of business under Section 23 of the BR Act, 1949 read with Section 56 thereof. Opening a new place of business without valid authorization (except in cases permitted by the Reserve Bank) is a violation of the said Act and is liable for penal action. The reporting of opening a new place of business shall be as per procedure given in Chapter III of this Master Direction.

12. The bank should ensure that there are no restrictions imposed by the local development or other authorities for setting up a commercial establishment in the locality where the new place of business is proposed to be opened. It is incumbent upon the bank to ensure that its branches are operating from premises that have a valid lease agreement and are free of any dispute between the bank and the landlords of the premises in question.

13. The conditions for opening of a new place of business are as under: