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The Reserve Bank of India issues these directions to govern the voluntary amalgamation of Urban Co-operative Banks. The boards of both the amalgamating and amalgamated entities must approve the scheme by a two-thirds majority. Shareholders must also approve the scheme by a two-thirds majority in number and value. The amalgamating bank must protect all deposits and maintain minimum regulatory capital adequacy ratios post-amalgamation. Entities must submit the approved scheme to the Reserve Bank of India via the PRAVAAH portal for sanction. The Reserve Bank of India may grant specific incentives, including branch rationalization and loss amortization, upon sanction. Dissenting shareholders may claim the value of their shares within three months of the sanction date.
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RBI/DoR/2025-26/270
DoR.HOL.REC.189/16-13-100/2025-26
November 28, 2025
Reserve Bank of India (Urban Co-operative Banks - Voluntary Amalgamation) Directions, 2025
Table of Contents
Chapter I - Preliminary
A. Short Title and Commencement
B. Applicability
D. Scope
Chapter II – Approval by Board of Directors and Shareholders
A. Approval by Board of Directors
B. Approval by Shareholders
Chapter III – Approval by RBI
Chapter IV – Sanction of Scheme of Amalgamation
Chapter V – Entitlement of dissenting shareholders
Chapter VI - Repeal and Other Provisions
A. Repeal and saving
B. Application of other laws not barred
C. Interpretations
Annex
In exercise of the powers conferred by Section 44A and Section 35A of the Banking Regulation Act, 1949, as amended vide Banking Regulation (Amendment) Act 2020 (39 of 2020), read with Section 56 thereof; and all other provisions / laws enabling the Reserve Bank of India (‘RBI’) in this regard, RBI being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Directions hereinafter specified.
These Directions shall be called the Reserve Bank of India (Urban Co-operative Banks – Voluntary Amalgamation) Directions, 2025.
These Directions shall come into force with immediate effect.
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.
(1) ‘Amalgamated Entity’ means the entity which is proposed to transfer its business to another entity under the scheme of amalgamation.
(2) ‘Amalgamating Entity’ means the entity which is to acquire the business of the amalgamated entity under the scheme of amalgamation.
(3) ‘Amalgamation’ refers to one or more entities merging with another entity under the relevant statutes / regulations under a scheme of amalgamation (or whatever name called), which sets out the terms and modalities of the process.
These Directions shall cover amalgamation of two or more UCBs.
RBI shall consider only those proposals where:
the amalgamating UCB assures to protect deposits of all the depositors of the amalgamated UCB irrespective of whether the net worth of the amalgamated UCB is positive or negative, and in the latter case, whether on its own or with financial support from the State Government extended upfront as part of the process of the amalgamation, and
the CRAR of the amalgamating UCB post-amalgamation conforms to the minimum regulatory requirement as prescribed by RBI.
The decision of amalgamation shall be approved by two-third majority of the total number of Board members (not merely of those present and voting) of both the amalgamating and the amalgamated UCBs.
While giving approval, the Boards of the UCBs concerned shall give particular consideration to the following matters:
Whether due diligence exercise has been undertaken in respect of the amalgamated entity.
The changes which are proposed to be made in the composition of the Board of Directors of the amalgamating UCB, consequent upon amalgamation, shall be in conformity with the Reserve Bank guidelines / directives in this regard. Further, these changes shall also be in conformity with the relevant provisions of the cooperative societies act, as applicable, to the extent that they are not in conflict with the relevant RBI directions / guidelines.
The nature and quantum of consideration that the amalgamating UCB will pay to the shareholders of the amalgamated UCB.
Whether the swap ratio has been determined by independent valuers having required competence and experience and whether, in the opinion of the Board, such swap ratio is fair and proper.
The shareholding pattern in the concerned entities and whether, as a result of the amalgamation and the swap ratio, the shareholding of any person in the amalgamating UCB will be in contravention of RBI guidelines or the concerned co-operative societies act(s) requiring specific approval of any of the regulator.
The assets, liabilities and reserves of the amalgamated UCB shall be incorporated in the books of the amalgamating UCB at their existing carrying amounts, and such incorporation shall not result in any revaluation upwards, or credit being taken for unrealised gains.
The impact of amalgamation on the profitability, net NPA, capital adequacy ratio, and compliance with exposure norms of the amalgamating UCB.
The draft scheme of amalgamation, having been approved separately by the Boards of Directors of each of the UCBs under amalgamation, in accordance with paragraph 8 and paragraph 9, shall be approved by the shareholders of each UCB by a resolution passed by a majority representing two-thirds of the shareholders both in number and value, present in person at a meeting called for the purpose.
The notices of every meeting of the shareholders called for approving the draft scheme of amalgamation shall be published in newspapers at least once a week for three consecutive weeks in not less than two newspapers circulating in the locality or localities where the registered office of the UCB is situated, and one of the newspapers shall be in a language commonly understood in the locality or localities.
Subsequent to the scheme of amalgamation being approved by the requisite majority of shareholders as specified under paragraph 10 of these Directions, it shall be submitted to RBI for sanction.
For this purpose, information and documents shall be submitted to RBI in accordance with Annex, through the PRAVAAH portal (https://pravaah.rbi.org.in).
Sanction of the scheme shall be through an order in writing directing the date from which the properties / assets and liabilities of the amalgamated UCB will be transferred to and vest in the amalgamating UCB and thereby, the amalgamated UCB shall stand dissolved in terms of the provisions of Sub Section 6-A of Section 44A of the Banking Regulation Act, 1949 (AACS).
A copy of the order directing such dissolution of the amalgamated UCB will be transmitted by RBI to the Registrar of Cooperative Societies or the Central Registrar, as applicable, under whose jurisdiction the amalgamated UCB is registered as a Cooperative Society, and on receipt of such order, the Registrar shall strike off the name of the Society from its records in terms of the provisions of Sub Section 6-B of Section 44A of the Act ibid. Additionally, a copy of the order shall also be transmitted to the Registrar of Cooperative Societies or the Central Registrar under whose jurisdiction the amalgamating UCB is registered, if the amalgamated and amalgamating UCBs are governed under different Cooperative Society Acts.
In case, the amalgamating UCB is a uni-state bank and becomes multi-state bank as a result of the amalgamation with a uni-state bank registered in another State, a letter containing approval of the merger will be transmitted to the Central Registrar for registration of the UCB as a multi-state UCB under the Multi-State Co-operative Societies Act, 2002, and the amalgamation shall take effect only after the said registration with the issue of sanction order.
Incentives to amalgamating UCBs: RBI may at its own discretion consider granting additional incentives as detailed below to an amalgamating UCB at the time of sanction of the scheme of amalgamation:
