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What is revised branch authorization policy for UCBs?

Reserve Bank of India (RBI) has revised the branch authorisation policy for Urban Co-operative Banks (UCBs).

What is the basis of revised norms?

Reserve Bank of India (RBI) had constituted the Expert Committee on Urban Co-operative Banks on February 15, 2021, under the Chairmanship of Shri N. S. Vishwanathan, former Deputy Governor, RBI. Based on the recommendations of the committee, RBI has revised the regulatory framework for Urban Co-operative Banks (UCBs) [What is revised regulatory framework for Urban Co-operative Banks (UCBs)]?

In December 2022, RBI had revised the norms for classification of UCBs as Financially Sound and Well Managed (FSWM).

What is revised branch authorization policy for UCBs?

  • UCBs in all Tiers (except Salary Earners’ Banks) identified as Financially Sound and Well Managed (FSWM), are permitted to open new branches up to 10% of the number of full-fledged branches (at the end of previous financial year) in a financial year, subject to a maximum of 5 branches without having the need to take permission from RBI. 
  • If the total number of full-fledged branches (at the end of previous financial year) is less than 10, the bank will be eligible to open at least one branch.
  • The banks have the liberty to either open a new branch or upgrade an Extension Counter, which has been in operation for more than 3 years, to a full-fledged branch, within the overall limit of 10%. 
  • Opening of Extension counters, Controlling Offices (Regional/ Zonal/ Administrative Office), ATMs etc. is not covered under this route and they will continue to be governed by extant guidelines.
What are the reporting requirements for opening of branches by UCBs?
  • UCBs shall report to concerned Regional Office of Department of Supervision (Central Office, in case of UCBs under jurisdiction of Mumbai office) of RBI, immediately and in any case not later than 15 calendar days, after opening of the branch complying with all the rules. 
  • The UCBs shall also submit the details on the Central Information System for Banking Infrastructure (CISBI) portal as per extant instructions.


References

Reserve Bank of India. (2023, June 08). 'Rationalization of Branch Authorisation Policy for Urban Co-operative Banks (UCBs)'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12512&Mode=0


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