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Opening / shifting / closure of place of business by DCCBs

Reserve Bank of India (RBI) has issued guidelines for opening / shifting / closure of place of business by District Central Co-operative Banks (DCCBs).

What is the pre-condition for opening / shifting place of business by DCCBs?

Pursuant to the amendment to the Banking Regulation Act dated September 29, 2020, District Central Co-operative Banks (DCCBs) are permitted to open new place of business / install ATMs or shift the location of such offices only after obtaining prior approval of Reserve Bank of India (RBI). 

What is the criteria for opening / shifting / upgrading the place of business by DCCBs?

The criteria for opening of branches / extension counters / specialized branches / regional offices / zonal offices / administrative offices / shifting of branches / upgradation of extension counters into full-fledged branches by a DCCB are as follows -

  • A licensed DCCB should have completed at least 3 years of operation.
  • CRAR at least 9%.
  • No default in maintenance of CRR / SLR during the preceding financial year.
  • Net NPA less than 5%.
  • The bank should have made a net profit during the preceding 2 financial years.
  • The bank should have a good track record of regulatory compliance and no monetary penalty should have been imposed on the bank for violation of RBI directives / guidelines during last 2 financial years.
  • The bank should not have been placed under any specific direction issued by RBI during the preceding 2 financial years.

What is the process for opening / shifting / upgrading the place of business by DCCBs?

  • DCCBs may submit their application to concerned Regional Office (RO) of RBI for prior approval for opening of branches / extension counters / specialized branches / regional offices / zonal offices / administrative offices / shifting of branches / upgradation of extension counters into full-fledged branches. 
  • The banks shall also forward a copy of the application to National Bank for Agriculture and Development (NABARD) which, in turn, shall forward their recommendation in the matter to concerned RO of RBI.

What is the criteria for installation of ATMs by DCCBs?

  • DCCBs shall be allowed to install on-site ATMs without seeking prior approval of RBI. 
  • They may also install off-site / mobile ATMs without prior permission from RBI subject to satisfying the criteria for opening / shifting / upgrading the place of business as mentioned above. 
  • DCCBs shall report to concerned RO of RBI under whose jurisdiction the Head Office of the DCCB is functioning, immediately after operationalization of the off-site / mobile ATMs but within 15 days, and obtain authorization under Section 23 of the Banking Regulation Act, 1949 (AACS) from the concerned RO of RBI.

What is the criteria for shifting place of business by DCCBs?

DCCBs may shift their 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.

The DCCBs shall ensure that -

  • The decision to shift branch shall be taken by the Board.
  • The shifting of branch shall be approved by Registrar of Cooperative Societies (RCS), as required under Co-operative Act / Rules applicable.
  • Customers of the branch, which is being shifted, should be informed 2 months in advance so as to avoid inconvenience to them.
  • A report shall be submitted by DCCBs to the concerned RO of RBI and NABARD within 1 month from the date of such shifting.
  • The DCCBs shall submit the branch licence in original to the concerned RO of RBI for recording the change in the branch licence.

What is the criteria for closure of branches and extension counters by DCCBs?

DCCBs are allowed to close their un-remunerative branches without prior permission of RBI subject to the following conditions -

  • The bank should not have been placed under any directions under section 35A of the Banking Regulation Act, 1949 (AACS).
  • The decision to close down branches should be taken by the Board.
  • The closure of branch shall be approved by RCS of the respective state.
  • The bank should give 2 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.
  • It should return the original licences issued for the closed branch to the concerned RO of RBI.
  • The disposal of the premises occupied by the erstwhile branch should be reported to the concerned RO of RBI, NABARD and RCS.
  • Bank should report to the concerned RO of RBI and NABARD after closing the branches, within 1 month from the date of closure, along with copies of the relative Board resolution and RCS approval.
  • The bank should preserve all the relevant records and make them available to NABARD inspection team for scrutiny during the course of inspection.


References

Reserve Bank of India. (2022, August 11). 'Section 23 of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies) – Opening of new place of business by District Central Co-operative Banks (DCCBs)'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12375&Mode=0

Reserve Bank of India. (2023, October 30). 'Clarification regarding Shifting of Branches/Offices/Extension Counters within the same city, town or village by District Central Co-operative Banks (DCCBs) and Guidelines on Closure of Branches and Extension Counters by DCCBs'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12559&Mode=0


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