Urban Co-operative Banks Branch Authorisation Directions

RBI/DOR/2025-26/271 DOR.LIC.REC.No.330/07-01-000/2025-26 December 04, 2025

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

Table of Contents

• Chapter I – Preliminary
• Chapter II – Role of Board of Directors
• Chapter III – Branch Authorisation
• Chapter IV – Business Facilitator (BF) / Business Correspondent (BC) Model
• Chapter V – Doorstep Banking
• Chapter VI – Information Reporting
• Chapter VII – 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 (Urban 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 Urban Co-operative Banks (hereinafter collectively referred to as 'UCBs / banks' and individually as a 'UCB / bank'. In this context, ‘Urban Co-operative Banks’ shall mean Primary Co-operative Banks as defined under section 5(ccv) read with Section 56 of Banking Regulation Act, 1949.

C. Definitions

4. In these Directions, unless the context states otherwise, the terms herein shall bear the meanings assigned to them below:

(1) ‘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 units / Banking Outlets / 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.

(2) ‘Area of Operation’ of a co-operative bank is the geographical area/s of operation stated in its byelaws, as approved by the registering authority and the Reserve Bank.

(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 Banking Outlets 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 – Role of Board of Directors

A. Board Approved Policies

6. A bank shall put in place separate Board-approved policies for the following: (1) Opening of branches keeping in view the financial health of the UCB, viability study of the new branches and customer service. The policy shall be updated periodically to keep it aligned with revised RBI guidelines. (2) Engagement of Business Correspondents (BCs) with the objectives of adequate oversight of the BCs as well as provision of services to customers, putting in place an effective complaints redressal system. (3) Offering Doorstep Banking services including selection of agents and payment of fee / commission, charges, if any, to be levied on the customer, etc.

B. Key responsibilities

7. The Board of a bank shall put in place an institutionalised system for periodically reviewing the implementation of the Business Facilitator (BF) / Business Correspondent (BC) Model at the Board level.

Chapter III – Branch Authorisation

A. Eligibility Criteria for Business Authorization (ECBA)

8. Based on a comprehensive review, it has been decided to replace the Financially Sound and Well Managed (FSWM) norms for UCBs with 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).

9. A bank will be considered as fully complying with ECBA if it meets the following conditions, based on the audited financial statements as of 31 March of the immediately preceding financial year: (1) The CRAR should be at least one percentage point above the minimum CRAR applicable to the bank as on the reference date; (2) Net NPAs of not more than 3%; (3) Net profits during the preceding two financial years; (4) 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; (5) Core Banking Solution (CBS) fully implemented; (6) The bank should not be under any Directions / Supervisory Action Framework / PCA of RBI at the time of Board resolution declaring the bank as ECBA compliant / application for authorization; and (7) The bank should have at least two professional directors on the Board as prescribed in the Reserve Bank of India (Urban Co-operative Banks – Governance) Directions, 2025.

10. 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 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 in this regard. The period of validity of compliance with ECBA will be considered to be till 30 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. (1) 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: (i) 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 (ii) 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).

11. The above process is subject to review by the Reserve Bank, including supervisory review. In case during the supervisory review, 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 UCBs

12. A UCB may extend its area of operation as follows: