What changed
RBI has issued a consolidated clarification on shifting branches/offices/extension counters within the same locality for DCCBs, and laid down conditions for closure of un-remunerative branches. Previously, DCCBs needed prior RBI approval for any relocation under Section 23; now, intra-locality shifts and closures of loss-making branches are permitted without prior RBI permission, subject to compliance with specified safeguards.
What it means for you
DCCBs gain operational flexibility to rationalize their branch network without seeking RBI's prior nod for same-locality shifts or closure of unprofitable branches. This reduces regulatory burden and speeds up decision-making. However, banks must ensure board-level approval, RCS clearance, and advance customer communication to avoid complaints and maintain transparency.
What you must do
- Ensure board resolution records viability assessment for any branch shift or closure.
- Obtain approval from Registrar of Cooperative Societies (RCS) before shifting or closing a branch.
- Give two months' advance notice to customers via press release and individual communication for shifts and closures.
- Submit shifting report to RBI Regional Office and NABARD within one month using Annex-2 format.
- Surrender original branch licence to RBI Regional Office for recording change after shifting.
- For closure, return the original branch licence to RBI Regional Office and report in Form VI within one month.
Who it affects
All District Central Co-operative Banks (DCCBs), Registrar of Cooperative Societies (RCS) of respective states
Can a DCCB shift a branch from one city to another without RBI approval?
No. The relaxation applies only to shifting within the same city, town, or village (or same municipal ward for urban areas). Any inter-city or inter-state shift still requires prior RBI approval under Section 23 of the BR Act.
What if a DCCB is under RBI directions under Section 35A? Can it still close a branch?
No. The closure guidelines explicitly require that the bank should not have been placed under any directions under Section 35A of the Banking Regulation Act, 1949 (AACS). Such banks must continue to seek prior RBI approval for closures.
How much notice must a DCCB give customers before closing a branch?
The bank must give two months' advance notice to all existing depositors/clients through a press release in local leading newspapers and also communicate individually to each constituent well in advance of closure.