What changed
Previously, UCBs could only shift offices within the same town or locality without prior permission, with inter-city shifts requiring case-by-case approval. Now, RBI has formalized a policy allowing UCBs (except unit banks and those unlicensed or Grade III/IV) to shift branches from one city to another within the same state, subject to population group and underbanked district conditions.
What it means for you
This gives UCBs more flexibility to optimize their branch network by relocating to more viable locations within their state, potentially improving cost efficiency and business performance. However, banks must ensure the new centre matches the population group of the old one and, for underbanked districts, stays within such districts. Non-compliant or weak banks remain restricted.
What you must do
- Review your branch portfolio to identify candidates for inter-city shifts that meet population group and underbanked district criteria.
- Prepare applications with justification of cost and business benefits for submission to the Regional Office of Urban Banks Department.
- Ensure your bank is not unlicensed, Grade III/IV, or non-compliant with Section 11(1) of B.R. Act, 1949 (AACS) before applying.
- Acknowledge receipt of this circular to your Regional Office.
Who it affects
All Primary (Urban) Co-operative Banks (UCBs) excluding unit banks, unlicensed, Grade III/IV, or non-compliant banks, UCBs with branches in semi-urban, urban, or metropolitan centres, UCBs considering branch rationalization within their state
Can a UCB shift a branch from a city in one state to a city in another state?
No, the circular only permits shifting within the same state. Inter-state shifts are not covered.
What if my UCB is unlicensed or categorized as Grade III/IV?
Such banks are not eligible for this facility. They must continue to seek prior RBI permission for any office shift.
What does 'same or lower population group' mean?
Population groups are classified by RBI (e.g., A, B, C, D centres). A branch can only be shifted to a centre with the same or lower classification, e.g., from a 'D' centre to another 'D' centre only.
Are unit banks eligible for this facility?
No, the circular explicitly excludes unit banks from this facility.