What changed
RBI has adopted a new criteria for StCBs to open branches/extension counters under Section 23. In a three-tier structure, branches are normally allowed in state capitals; district HQ branches are restricted to servicing co-op bank deposits. In semi-urban/rural areas where CCBs are non-existent or weak, StCBs may open branches with RCS recommendation. For two-tier structures (StCB-PACS), branches are allowed in urban and rural centres, except north-eastern states where general permission applies.
What it means for you
StCBs now have clearer, more restrictive branch expansion rules tied to financial health and state government cooperation. Banks must meet CRAR of at least 9%, maintain CRR/SLR, keep net NPAs below 10%, and have no serious irregularities. Additionally, the state government must have signed the MoU under the revival package for short-term rural co-op credit structure. This tightens eligibility and ensures only compliant banks expand.
What you must do
- Ensure your StCB meets CRAR ≥9%, CRR/SLR compliance, net NPA ≤10%, and no serious irregularities as per latest inspection.
- Confirm that your state government has signed the MoU under the revival package for short-term rural co-op credit.
- For new branches, submit applications to RBI (RPCD, Central Office) through NABARD in prescribed format.
- If you have pending proposals, forward additional information as per new norms through NABARD promptly.
Who it affects
State Co-operative Banks (StCBs), Central Co-operative Banks (CCBs), Primary Agricultural Credit Societies (PACS), Registrar of Co-operative Societies (RCS), NABARD
Can StCBs open branches in district headquarters?
Yes, but only for maintaining and servicing deposits of co-operative banks. General branch expansion in district HQs is not allowed under the three-tier structure.
What are the financial eligibility criteria for StCBs to open new branches?
StCBs must have CRAR of at least 9%, comply with CRR and SLR, net NPA not exceeding 10%, and no serious irregularities as per the latest inspection report.
Is state government approval required for branch expansion?
Yes, the state government must have signed the MoU under the Government of India's Revival Package for short-term rural co-operative credit structure for the StCB to be eligible.