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Branch Licensing Norms for Primary (Urban) Cooperative Banks (UCBs) Liberalised

Reserve Bank of India has decided to liberalise and rationalise the branch licensing norms for well managed and financially sound Primary (Urban) Cooperative Banks (UCBs) in the States that have signed MoUs with the Reserve Bank and those registered under the Multi-State Cooperative Societies Act, 2002.

RBI has advised vide notification dated Jun 16, 2008, that approvals for branch expansion including off site ATMs in respect of such UCBs will henceforth be considered based on their Annual Business Plans, subject to:

i) Maintenance of a minimum CRAR of 10% on a continuous basis with minimum owned funds commensurate with entry point capital norms for the centre where branch is proposed

ii) Net NPAs being less than 10%

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

iv) Net profit in the immediate preceding financial year and

v) Regulatory comfort based on inter alia, track record of compliance with the provisions of Banking Regulation Act, 1949 (AACS), RBI Act, 1934 and the instructions/directions issued by RBI from time to time.

3. UCBs, satisfying the above mentioned norms may prepare an Annual Business Plan (ABP) for opening of branches/extension counters, upgradation of extension counters into full-fledged branches, setting up of new off site Automated Teller Machines, in their existing area of operation, for the next 12 months, with the approval of their Board of Directors and submit the to the respective Regional Offices of Reserve Bank of India. For the year 2008-09, the Annual Business Plan may be submitted to RBI preferably by September 2008. From the year 2009-10 onwards, the plan may be submitted preferably by end of December of the previous financial year.

4. All other instructions on selection of centres, approval of centres, licence and its validity period, procedural guidelines for permission to open branches, norms for opening extension counters and licensing policy for Salary Earners' banks remain unchanged.

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