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
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.