What changed
RBI has introduced a general permission route for branch expansion for FSWM UCBs, replacing the need for prior approval for eligible banks. The prior approval route continues for other UCBs but with simplified timelines to speed up approvals.
What it means for you
FSWM UCBs can now open branches faster without waiting for RBI nod, boosting their growth potential. Non-FSWM banks still need prior approval but benefit from a streamlined process, reducing approval delays. This rationalization aims to strengthen the UCB sector by enabling expansion for financially sound banks.
What you must do
- Assess your bank's FSWM status to determine eligibility for general permission.
- If eligible, draft a Board-approved branch opening policy covering financial health, viability, and customer service.
- Limit new branches to 10% of full-fledged branches (max 5) per financial year; if branches <10, you can open at least one.
- Report new branch openings to the concerned RBI Regional Office within 15 calendar days and update CISBI portal.
- For non-FSWM banks, prepare Annual Business Plan (ABP) under prior approval route with simplified timelines.
Who it affects
All Primary (Urban) Co-operative Banks (except Salary Earners’ Banks), Financially Sound and Well Managed (FSWM) UCBs, Non-FSWM UCBs seeking branch expansion
What is the maximum number of branches a FSWM UCB can open under general permission?
Up to 10% of the number of full-fledged branches at the end of the previous financial year, subject to a maximum of five branches per financial year. If the bank has less than 10 branches, it can open at least one branch.
Does the general permission cover opening ATMs or extension counters?
No, the general permission only covers new full-fledged branches or upgrading an extension counter (operating for over 3 years) to a full-fledged branch. Opening extension counters, controlling offices, and ATMs continue under existing guidelines.
What should a non-FSWM UCB do to open branches?
Non-FSWM UCBs must continue using the prior approval route with an Annual Business Plan (ABP). The process has been simplified to reduce approval time, as detailed in Annex-II of the circular.