DRAFT FOR COMMENTS

RBI/2025-26/--
DoR.LIC.REC.No./00-00-000/2025-26

XX, 2025

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

Preamble

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 (hereinafter collectively referred to as 'banks' and individually as a 'bank').

In this context, ‘rural co-operative banks’ shall mean State Co-operative Banks and Central Co-operative Banks, 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 co-operative 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. Direct interface with customers is not permitted.

(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. Direct interface with customers is not permitted.

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. State Co-Operative Banks

A.1 Opening of branches / extension counters

6. In a three-tier structure consisting of State Co-operative Banks (StCBs) at the apex level, Central Co-operative Banks (CCBs) at the intermediate level and Primary Agricultural Credit Societies (PACS) at the ground level, StCBs will be allowed to open branches / extension counters (ECs) in State capitals. In case a branch is required in district head quarters, the StCB may open a branch only for maintaining and servicing deposits of co-operative banks. In semi-urban / rural areas, where CCBs are non-existent, weak or virtually defunct, StCBs may be allowed to open branches, provided the CCB in the adjoining district is not in a position to extend its area of operation to cover the area (where CCB is non-existent) or to take over the weak / defunct CCB through merger. In all such cases, the recommendations of the Registrar of Co-operative Societies (RCS) of the concerned State will be required.

7. In a two-tier co-operative credit structure consisting of StCB and PACS, StCB may be allowed (except in north-eastern States, where general permission has been granted for opening branches anywhere in the States) to open branches in urban as well as rural centres.

8. The criteria and the procedure for opening of branches / extension counters / specialised branches within the area of operation of the StCBs are as follows:

• (i) CRAR not being less than nine percent;

• (ii) No default in maintenance of CRR / SLR during the preceding financial year;

• (iii) Net NPA being less than five percent; and

• (iv) The StCB should have a track record of regulatory compliance and no monetary penalty should have been imposed on the StCB for violation of RBI directives / guidelines during last two financial years.

Explanation: The above parameters shall be as assessed by National Bank for Agriculture and Development (NABARD) in their latest inspection report.

9. In order to expedite regulatory approvals under Section 23 of the Banking Regulation Act, 1949 (AACS), an StCBs satisfying the above criteria may submit its applications in the prescribed format to the concerned Regional Office of RBI through NABARD for prior approval for opening of branches / specialised branches / extension counters / shifting of branches / upgradation of extension counters into full-fledged branches.

A.2 Opening of Specialised branches / Upgradation of Extension Counters

10. A StCB shall obtain prior approval of RBI  for opening specialised branches (other than service branches)  for conducting foreign exchange business etc. and for upgradation of existing Extension Counters (ECs) into full-fledged branches.

11. The liberalised branch licensing procedure enunciated above, shall be followed only after obtaining the approval of the StCB’s Board. An StCB shall approach the concerned regional office of Department of Regulation (DoR), RBI in its jurisdiction for necessary licence / amendment of licence using the Pravaah portal (https://pravaah.rbi.org.in).

A.3 Shifting of branches in Urban / Metropolitan and Port Town Centres

12. An StCB is allowed to shift their branches in urban / metropolitan / Port Town Centres within the same locality / municipal ward for which prior approval of RBI is not required. The new postal address of the branch and date of shifting to the new premises shall be submitted to RBI’s concerned Regional Office soon after the shifting. However, shifting of a branch to a different locality / municipal ward other than the one mentioned in the licence shall require prior approval of RBI.

A.4 Splitting or part shifting of branches within the same Centre

13. Splitting of branches or part shifting of some of the departments of the parent branch may be made to nearby location due to space constraints, better customer service etc., without the prior approval of RBI subject to the condition that identical business shall not be conducted from both the premises.

A.5 Opening of Service Branches

14. An StCB may open Service Branches / regional collection centres for facilitating cheque clearing and allied work only at Metropolitan or large centres without obtaining the prior approval of RBI.

A.6 Safe Deposit Locker Facility

15. An StCB shall apply to RBI through the Pravaah portal (https://pravaah.rbi.org.in) for necessary amendment in the licence, if it decides to provide locker facilities at any EC. The StCB shall be permitted to provide Safe Deposit Locker facility at its ECs, subject to the following conditions:

• (i) adequate security arrangements can be made;

• (ii) the facility is open to locker-holders during specified hours only, which may be continuous period or in two separate spells, in mornings / evenings, taking into account the practicability / convenience of the StCB as well as the locker holders;

• (iii) the organisation on whose premises the EC is functioning agrees to the EC providing Safe Deposit Lockers facility;

• (iv) the facility provided is independently a viable proposition for the StCB; and

• (v) no additional staff is recruited for the purpose i.e., staff may be deployed from the existing manpower available.

A.7 Automated Teller Machines (ATMs)

16. An StCB does not require permission of RBI for installation of ATMs at branches and ECs for which it holds licence issued by RBI. The StCB shall, however, furnish to the concerned Regional Office of RBI (DoR) the particulars in the enclosed format in Annex I regarding installation of ATMs at the branches and ECs.

A.8 Off-site / Mobile Automated Teller Machines (ATMs)

17. An StCB shall be allowed to install Off-site ATMs / Mobile ATMs as per its need and potential in its area of operation without prior permission from RBI subject to satisfying the following criteria.

• (i) CRAR not being less than nine percent;

• (ii) No default in maintenance of CRR / SLR during the preceding financial year;

• (iii) Net NPA being less than five percent; and

• (iv) track record of regulatory compliance and no monetary penalty should have been imposed on the StCB on account of violation of RBI directives / guidelines during last two financial years.

Explanation: The above parameters shall be as assessed by NABARD in their latest inspection report.

18. The StCB shall ensure that the proposals for the installation of Off-site / Mobile ATMs are duly approved by its Board of Directors.

19. Operationalisation of Off-site / Mobile ATMs by an StCB shall be subject to the following conditions:

• (i) The StCB should be CBS compliant and satisfy eligibility criteria based on latest inspection Report.

• (ii) The business transacted at the off-site ATMs shall be recorded in the books of the respective branch / base branch / Centralised Data Centre.

• (iii) Mobile ATMs shall be linked to a branch and shall be operated strictly within thearea of operation of the StCB.

• (iv) No person other than the security guard shall be posted at such Off Site ATM centre.

• (v) The StCB shall make adequate stand-by arrangements for meeting the cash requirements of the ATM.

• (vi) The StCB shall ensure that only properly sorted and examined notes are put into circulation through the ATM.

• (vii) ATMs may be provided with ramps so that wheelchair users / persons with disabilities can easily access them and also make arrangements in such a way that the height of the ATM does not create an impediment in its use by a wheelchair user.

• (viii) At least one third of new ATMs installed shall be talking ATMs with Braille keypads and placed strategically in consultation with other banks to ensure that at least one talking ATM with Braille keypad is generally available in each locality for catering to needs of visually impaired persons. The banks may also bring the locations of such talking ATMs to the notice of their visually impaired customers.

• (ix) An StCB shall not use the ATM screens / Network for Third party advertisement such as display of products of other manufacturers / dealers / vendors. However, there is no objection to the StCB utilising the ATM screens for displaying its own products.

20. The StCB shall report to the concerned Regional Office (DoR) of RBI under whose jurisdiction the Head Office of the StCB is functioning immediately after operationalisation of offsite / mobile ATMs and in any case not later than 15 days, as per the format enclosed (Annex II) and obtain authorisation under section 23 of the B. R. Act, 1949 (AACS) through the Pravaah portal (https://pravaah.rbi.org.in).

A.9 Extending Value-Added Services through ATMs

21. An StCB may offer all its products and services through the ATM channels, provided the technology permits the same and adequate checks are put in place to prevent the channel from being misused to perpetrate frauds on the StCBs / other genuine customers.

22. An StCB shall adhere to the guidelines relating to the security measures at ATMs issued by RBI vide circulars DCM(Plg.)No.3641/10.25.007/2017-18 dated April 12, 2018 and DCM(Plg.)No.2968/10.25.007/2018-19 dated June 14, 2019 and any subsequent instructions issued by RBI relating to security aspects at ATMs.

B. District Central Co-Operative Banks

B.1 Opening of new place of business

23. Pursuant to the amendment to the Banking Regulation Act (No.39 of 2020) dated September 29, 2020, a District Central Co-operative Bank (DCCB) is permitted to open new place of business / install ATMs or shift the location of such offices only after obtaining prior approval of RBI.

24. The criteria for opening of branches / extension counters / specialised branches / regional offices / zonal offices / administrative offices / shifting of branches / upgradation of extension counters into full-fledged branches by a DCCB shall be as follows:

• (i) A licenced DCCB should have completed at least three years of operation;

• (ii) CRAR not being less than nine percent;

• (iii) No default in maintenance of CRR / SLR during the preceding financial year;

• (iv) Net NPA being less than five percent;

• (v) The DCCB should have made a net profit during the preceding two financial years;

• (vi) The DCCB should have a good track record of regulatory compliance and no monetary penalty should have been imposed on the DCCB for violation of RBI directives / guidelines during last two financial years; and

• (vii) The DCCB should not have been placed under any specific direction issued by RBI during the preceding two financial years.

Explanation: The above parameters will be considered as they appear in the latest inspection report of NABARD.

25. In order to expedite the regulatory approvals under Section 23 of the Banking Regulation Act 1949 (AACS), the DCCB satisfying the criteria as mentioned above, shall submit its application in the format prescribed in the Banking Regulation (Co-operative Societies) Rules, 1966 to concerned Regional Office (DoR) of RBI for prior approval for opening of branches / extension counters / specialised branches / regional offices / zonal offices / administrative offices / shifting of branches / upgradation of extension counters into full-fledged branches using the Pravaah portal (https://pravaah.rbi.org.in). The DCCB shall also forward a copy of the application to NABARD which, in turn, shall forward their recommendation in the matter to RBI.

26. A DCCB shall be allowed to install on-site ATMs without seeking prior approval of RBI. The DCCB may also install off-site / mobile ATMs as per its need and potential in its area of operation without prior permission from RBI subject to satisfying the criteria as mentioned at paragraph 24 above. Further, the DCCB shall ensure that the proposal for installation of off-site / mobile ATMs is duly approved by their Board of Directors. Operationalisation of off-site / mobile ATMs by a DCCB is subject to the following conditions:

• (i) The DCCB should be CBS compliant and satisfy eligibility criteria based on latest inspection Report.

• (ii) The business transacted at the off-site ATMs shall be recorded in the books of the respective branch / base branch / Centralised Data Centre.

• (iii) Mobile ATMs shall be linked to a branch and shall be operated strictly within the area of operation of the DCCB.

• (iv) No person other than the security guard shall be posted at such off-Site ATM centre.

• (v) The DCCB shall make adequate stand-by arrangements for meeting the cash requirements of the ATM.

• (vi) The DCCB shall ensure that only properly sorted and examined notes are put into circulation through the ATM.

• (vii) ATMs may be provided with ramps so that wheelchair users / persons with disabilities can easily access them and also make arrangements in such a way that the height of the ATM does not create an impediment in its use by a wheelchair user.

• (viii) At least one third of new ATMs installed shall be talking ATMs with Braille keypads and placed strategically in consultation with other banks to ensure that at least one talking ATM with Braille keypad is generally available in each locality for catering to needs of visually impaired persons. The bank may also bring the locations of such talking ATMs to the notice of their visually impaired customers.

• (ix) The DCCB shall not use the ATM screens / Network for Third party advertisement such as display of products of other manufacturers / dealers / vendors. However, there is no objection to the DCCB utilising the ATM screens for displaying its own products.

• (x) The off-site / mobile ATMs may be installed at centres / places identified by it within its existing area of operation, with the approval of its Board of Directors. This would, however, be subject to any direction which the RBI may issue, including for closure / shifting of any such off-site / mobile ATMs, wherever so considered necessary.

• (xi) The DCCB is free to offer all its products and services through the ATM channel provided the technology permits the same and adequate checks are put in place to prevent the channel from being misused.

27. The formats for reporting on-site / off-site / mobile ATMs by the DCCB are furnished in Annex I and Annex II. The DCCB shall report to the concerned Regional Office (DoR) of RBI under whose jurisdiction the Head Office of the DCCB is functioning, immediately after operationalisation of the off-site / mobile ATMs and in any case not later than 15 days, as per the formats prescribed above and obtain authorisation under Section 23 of the Banking Regulation Act, 1949 (AACS) from the concerned Regional Office of the RBI using the Pravaah portal (https://pravaah.rbi.org.in).

28. The DCCB shall adhere to the guidelines relating to the security measures at ATMs issued by RBI vide circulars DCM(Plg.)No.3641/10.25.007/2017-18 dated April 12, 2018 and DCM(Plg.)No.2968/10.25.007/2018-19 dated June 14, 2019 and any subsequent instructions issued by RBI relating to security aspects at ATMs.

B.2 Shifting of Branches / Offices / Extension Counters

29. In terms of section 23(a), read with section 56 of Banking Regulation (BR) Act, 1949 (AACS), a DCCB may shift its Branches / Offices / Extension Counters located in the rural or semi-urban or urban / metropolitan areas, within the same village or town or locality / municipal ward respectively, without prior permission of RBI.

30. In this regard, the DCCB shall ensure that:

• (i) the decision to shift branch shall be taken by the Board after taking into account all the relevant factors including viability and should be properly recorded / minuted in the proceedings of the Board meeting;

• (ii) the shifting of branch shall be approved by Registrar of Cooperative Societies, as required under Co-operative Act / Rules applicable;

• (iii) due care shall be taken that customers of the branch, which is being shifted, are informed two months in advance so as to avoid inconvenience to them;

• (iv) a report in this regard shall be submitted by the DCCB in format, as per Annex III, to the concerned Regional Office of RBI and NABARD within a month from the date of such shifting; and

• (v) branch licence shall be submitted in original to the concerned Regional Office of RBI for recording the change in the branch licence.

B.3 Guidelines on Closure of Branches and Extension Counters

31. A DCCB is allowed to close its un-remunerative branches without prior permission of RBI subject to the following conditions:

• (i) The DCCB should not have been placed under any directions under section 35A of the Banking Regulation Act, 1949 (AACS).

• (ii) The decision to close down branches shall be taken by the Board after taking into account all the relevant factors and shall be properly recorded / minuted in the proceedings of the Board meeting.

• (iii) The closure of branch shall be approved by Registrar of Cooperative Societies of the respective state.

• (iv) The DCCB shall give two months notice in advance to all existing depositors / clients of the branch through press release in local leading newspapers as well as communicate to each constituent of the branch, well in advance of closure of the branch.

• (v) It shall return the original licence/s issued for the closed branch to the Regional Office concerned of RBI.

• (vi) The disposal of the premises occupied by the erstwhile branch shall be reported to Regional Office of RBI concerned, NABARD and the RCS.

• (vii) The DCCB shall report to the Regional Office of RBI and NABARD, in Form VI prescribed under Rule 8 of Banking Regulations (Co-operative Societies) Rules, 1966 after closing the branches, within one month from the date of closure, along with copies of the relative Board resolution and RCS approval.

• (viii) The DCCB shall preserve all the relevant records and make them available to NABARD inspection team for scrutiny during the course of inspection.

Chapter III – Information Reporting

32. An RCB is required to submit the information with regards to its branches / offices / Customer Service Points (CSPs) / etc. as detailed below:

(1) An RCB shall provide information in a single Proforma (Annex IV) online on Central Information System for Banking Infrastructure (CISBI) portal (https://cisbi.rbi.org.in). The instructions for submission of new Proforma online are given in Annex V. The system allots Uniform Code Number (UCN) / Basic Statistical Return (BSR) code / Authorised Dealer (AD) code to bank branches / offices / NAIOs / CSPs. The CISBI portal contains the relevant circulars, user manuals and other relevant documents to facilitate reporting.

(2) RBI has provided login credentials to Nodal Officers of the RCB for submitting its information in CISBI. Access to CISBI can also be sought by making a request through e-mail at mofbsd@rbi.org.in. An RCB shall submit information on CISBI portal as per guidelines given in Annex VI and thereafter bank branch / office / NAIO / other fixed CSPs i.e., other than ATMs, Cash Deposit Machines, Other Customer Services. etc., codes would be allotted by CISBI after due validations.

(3) It is further advised that CISBI also has provision to maintain complete bank level details (e.g. bank category, bank-group, bank code, type of licence issued, registration details, area of operation, addresses of offices, contact details of senior officials, etc.) and history of all the changes with time stamp. After gaining first time access of the system, the RCB shall ensure to submit correct and updated Bank Level information in all the fields where submission / updation rights are available with the RCB. After initial submission of information on CISBI portal, a one-time confirmation stating that ‘Correct and updated Bank level information has been submitted on CISBI’ shall be sent by the RCB to the concerned Regional Office of Department of Supervision within one month of gaining access to the portal. Any subsequent changes in the bank level information shall be submitted for updation on the CISBI portal on immediate basis by the RCB.

(4) An RCB shall submit immediately and in any case not later than one week, the information relating to opening, closure, merger, shifting and conversion of bank branches / Offices / ATMs / NAIO, etc. online through CISBI portal to DSIM, Banking Statistics Division, RBI, Central Office, C-8/9, Bandra-Kurla Complex, Mumbai-400051. At the CISBI portal, these changes are being implemented with immediate effect.

Chapter IV – Repeal and other Provisions

A. Repeal and saving

33. With the issue of these Directions, the existing Directions, instructions, and guidelines relating to branch authorisation as applicable to Rural Cooperative Banks stand repealed, as communicated vide notification dated XX, 2025. The Directions, instructions, and guidelines repealed prior to the issuance of these Directions shall continue to remain repealed.

34. Notwithstanding such repeal, any action taken or purported to have been taken, or initiated under the repealed Directions, instructions, or guidelines shall continue to be governed by the provisions thereof. All approvals or acknowledgments granted under these repealed lists shall be deemed as governed by these Directions.

B. Application of other laws not barred

35. The provisions of these Directions shall be in addition to, and not in derogation of the provisions of any other laws, rules, regulations, or directions, for the time being in force.

C. Interpretations

36. For the purpose of giving effect to the provisions of these Directions or in order to remove any difficulties in the application or interpretation of the provisions of these Directions, the RBI may, if it considers necessary, issue necessary clarifications in respect of any matter covered herein and the interpretation of any provision of these Directions given by the RBI shall be final and binding.