What changed
Previously, branch expansion approvals for eligible UCBs were granted on a case-by-case basis. Now, RBI will consider approvals based on the bank's Annual Business Plan (ABP) for the next 12 months, subject to five eligibility criteria. The ABP must be submitted to the respective Regional Office, with a deadline of preferably September 2008 for 2008-09 and preferably end of December for subsequent years.
What it means for you
This liberalisation gives well-managed UCBs a more predictable and streamlined path for branch and ATM expansion, reducing case-by-case delays. Banks must maintain strong financial health (CRAR, NPA, profitability) and compliance discipline to qualify. The ABP approach shifts some planning responsibility to the bank's board, requiring robust internal governance.
What you must do
- Ensure your UCB maintains minimum 10% CRAR continuously and net NPAs below 10%.
- Confirm no CRR/SLR defaults in the preceding financial year and net profit in the immediate past year.
- Prepare an Annual Business Plan (ABP) with board approval, covering branches, extension counters, and off-site ATMs.
- Submit the ABP in duplicate with Annexes I, II, IIIA, IIIB, and IV to your RBI Regional Office by the specified deadline.
- Review and adhere to all unchanged instructions from the September 2004 Master Circular on centre selection, licensing, and validity.
Who it affects
Primary (Urban) Cooperative Banks in states with MoUs with RBI, Multi-State Cooperative Societies Act, 2002 registered UCBs, RBI Regional Offices handling UCB supervision
What are the five eligibility criteria for using the ABP route?
The UCB must: (i) maintain minimum CRAR of 10% continuously with owned funds meeting entry point norms for the proposed centre; (ii) have net NPAs less than 10%; (iii) have no CRR/SLR default in the preceding financial year; (iv) show net profit in the immediate preceding financial year; and (v) have regulatory comfort based on compliance track record.
When should the Annual Business Plan be submitted?
For the year 2008-09, the ABP should be submitted preferably by September 2008. From 2009-10 onwards, submit by end of December of the previous financial year.
Does this circular change any other branch licensing rules?
No. All other instructions from the Master Circular dated September 1, 2004 on centre selection, approval, licence validity, extension counters, and Salary Earners' banks remain unchanged.