NRE/NRO Account Norms for Urban Co-operative Banks
Current · Source: Reserve Bank of India · RBI/2006-2007/427 · issued 04 Jun 2007 · ~2 min read
Quick answerRBI now allows UCBs in MOU states and multi-state UCBs to open NRE accounts if they meet strict norms: net worth Rs 25 crore, CRAR 9%, NPAs below 10%, three years profit, and KYC compliance. NRO accounts can only be maintained from redesignation, not newly opened.
The rule, in the simplest words
UCBs (Urban Co-operative Banks) in states that signed a deal with RBI or are multi-state can open NRE (Non-Resident External) accounts if they meet 8 rules: net worth (bank's own money) Rs 25 crore, CRAR (safety cushion) at least 9%, NPAs (bad loans) below 10%, profit for 3 years, no losses piled up, good internal checks, KYC (know your customer) rules followed, and at least 2 professional directors on the board.
UCBs cannot open new NRO (Non-Resident Ordinary) accounts; they can only keep existing ones when a customer becomes a non-resident, and only add interest money to them.
If a UCB has an AD Category I licence (special permission to handle foreign exchange), the NRO restrictions do not apply to it.
UCBs must apply to their RBI Regional Office for permission to start or renew NRE accounts.
How it plays out — a real example
A KYC & compliance officer in Indore checks her bank's records: net worth is Rs 30 crore, CRAR is 10%, NPAs are 5%, and profits have been steady for 5 years. She tells her manager, 'We meet all 8 norms, so we can apply to the RBI Regional Office to open NRE accounts for non-resident customers. But we still cannot open new NRO accounts—only keep existing ones and add interest.'
What changed
RBI reviewed eligibility norms for NRE/NRO accounts for UCBs. Banks in states with an MOU with RBI or registered under the Multi-State Co-operative Societies Act, 2002 can now open NRE accounts subject to eight conditions. Previously, UCBs could not accept NRO deposits; now they may maintain existing NRO accounts arising from redesignation, but cannot open fresh NRO accounts or accept new credits except interest.
What it means for you
UCBs with strong financials and governance can expand their NRE business, tapping into non-resident deposits. However, the strict net worth and profitability thresholds will limit eligibility to larger, healthier banks. The NRO restrictions remain tight, preventing UCBs from actively growing that portfolio unless they hold an AD Category I licence.
What you must do
Assess your bank's eligibility against the eight norms: net worth Rs 25 crore, CRAR 9%, NPAs below 10%, three-year profit, no accumulated losses, sound internal controls, KYC compliance, and at least two professional directors.
Apply to your Regional Office for fresh authorization or renewal to maintain NRE accounts.
For existing NRO accounts, ensure they are only maintained from redesignation and restrict fresh credits to interest only.
If your bank holds an AD Category I licence, note that NRO restrictions do not apply to you.
Who it affects
Primary (Urban) Co-operative Banks, UCBs in states with MOU with RBI, Multi-State Co-operative Societies Act, 2002 registered banks, UCBs with existing NRE/NRO accounts
❓ Common questions
Can my UCB open new NRO accounts for non-residents?
No, RBI does not permit opening fresh NRO accounts. You can only maintain existing NRO accounts that arise from redesignation when an account holder becomes non-resident, and no fresh credits (except interest) are allowed.
What are the key financial thresholds for NRE account eligibility?
Your bank must have a minimum net worth of Rs 25 crore, CRAR of at least 9%, net NPAs below 10%, and net profit for the preceding three years without accumulated losses.
Do these norms apply to all UCBs?
No, they apply only to UCBs registered in states that have signed an MOU with RBI for supervisory coordination and to banks registered under the Multi-State Co-operative Societies Act, 2002.
📜 Read the original circular — full text as issued by RBI
RBI/2006-2007/427
UBD.PCB.Cir.No. 46/16.12.000/06-07
June 4, 2007
The Chief Executive Officers of
All Primary (Urban) Co-operative Banks
Dear Sir/Madam,
Norms for maintaining NRE/NRO accounts - UCBs
Please refer to our circular UBD.PCB.Cir.No. 21/16.12.000/06-07 dated November 27, 2006 prescribing , inter alia, the norms for eligibility for Authorized Dealer category I and II licence.
2. In continuation thereof, we advise that the eligibility norms for maintaining NRE/NRO accounts have also been reviewed. It has been decided that banks registered in States that have entered into a Memorandum of Understanding (MOU) with Reserve Bank for supervisory and regulatory co-ordination and those registered under the Multi State Co-operative Societies Act, 2002 may be permitted to open NRE accounts subject to compliance with the following eligibility norms.
(i) Minimum net worth of Rs 25 crore.
(ii) CRAR of not less than 9%
(iii) Net NPAs to be less than 10%
(iv) Compliance with CRR/SLR requirements
(v) Net profit for preceding three years without any accumulated losses.
(vi) Sound internal control systems
(vii) Satisfactory compliance with KYC/AML guidelines
(viii) Presence of at least two professional directors on the Board.
3. As per extant instructions, UCBs are not permitted to accept NRO deposits and were required to close these accounts in a given time frame. It has now been decided that banks may maintain NRO accounts, arising from their redesignation as such, upon the account holders becoming non-resident. Opening of fresh NRO accounts will not be permitted. Further, no fresh credits barring periodical credit of interest will be allowed in these accounts. However, these restrictions will not be applicable to UCBs having Authorized Dealer Category I licence.
4. UCBs may apply to the Regional Offices of the Reserve Bank of India for fresh authorization, to maintain NRE accounts/renewal of the existing authorization, wherever applicable.
5. Please acknowledge receipt to our Regional Office concerned.
Yours faithfully,
(N.S.Vishwanathan)
Chief General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2006-2007/427 · issued 04 Jun 2007. The plain-English explanation above is BankPulse’s own independent summary.
Assess your bank's eligibility against the eight norms: net worth Rs 25 crore, CRAR 9%, NPAs below 10%, three-year profit, no accumulated losses, sound internal controls, KYC compliance, and at least two professional directors.
📜 Compliance
Apply to your Regional Office for fresh authorization or renewal to maintain NRE accounts.
For existing NRO accounts, ensure they are only maintained from redesignation and restrict fresh credits to interest only.
If your bank holds an AD Category I licence, note that NRO restrictions do not apply to you.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Credit Manager at a bank this circular applies to (Primary (Urban) Co-operative Banks, UCBs in states with MOU with RBI, Multi-State Co-operative Societies Act, 2002 registered banks, UCBs with existing NRE/NRO accounts), your first concrete step on “NRE/NRO Account Norms for Urban Co-operative Banks” is: “Assess your bank's eligibility against the eight norms: net worth Rs 25 crore, CRAR 9%, NPAs below 10%, three-year profit, no accumulated losses, sound internal controls, KYC compliance, and at least two professional directors.” (RBI issued this 04 Jun 2007).
Circular: RBI/2006-2007/427 -- NRE/NRO Account Norms for Urban Co-operative Banks
Issued: 04 Jun 2007
Action required: Assess your bank's eligibility against the eight norms: net worth Rs 25 crore, CRAR 9%, NPAs below 10%, three-year profit, no accumulated losses, sound internal controls, KYC compliance, and at least two professional directors.
Action required: Apply to your Regional Office for fresh authorization or renewal to maintain NRE accounts.
Action required: For existing NRO accounts, ensure they are only maintained from redesignation and restrict fresh credits to interest only.
Action required: If your bank holds an AD Category I licence, note that NRO restrictions do not apply to you.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=3573&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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