What changed
RBI has formalised a comprehensive framework for UCBs to offer digital banking channels. Previously, there was no standalone authorisation direction; now view-only facility is allowed for all UCBs meeting CBS and IPv6 requirements, while transactional banking requires explicit RBI authorisation. The directions also mandate board-approved policies for digital banking covering statutory and regulatory requirements.
What it means for you
UCBs now have a clear regulatory pathway to launch digital banking services, but transactional offerings remain tightly controlled. Banks must invest in CBS and IPv6 compliance to offer even basic view-only services. The requirement for prior RBI approval for transactional facilities means UCBs cannot independently roll out full digital banking; they must seek authorisation. This will likely slow down digital expansion for smaller UCBs but provides a structured approval process.
What you must do
- Ensure your bank has implemented Core Banking Solution (CBS) and enabled IPv6 on public-facing IT infrastructure to qualify for view-only digital banking.
- Draft and get board approval for a comprehensive digital banking policy covering liquidity and operational risks, statutory and regulatory compliance.
- If you plan to offer transactional digital banking, prepare and submit an application to RBI for authorisation under these directions.
- Review your current digital banking offerings to ensure they align with the definitions and restrictions in the new directions, especially the view-only vs transactional distinction.
Who it affects
Urban Co-operative Banks (UCBs) in India, Primary Co-operative Banks as defined under Section 5(cc) of the Banking Regulation Act, 1949, IT and digital banking teams of UCBs, Compliance and risk management departments of UCBs
Can my UCB offer internet banking without RBI approval?
Only view-only banking facility (balance enquiry, statement download, etc.) is allowed without prior RBI approval, provided your bank has CBS and IPv6 enabled. Transactional banking (funds transfer, loans, etc.) requires explicit authorisation from RBI under these directions.
What is the effective date of these directions?
The directions come into effect from January 1, 2026. Banks should use the interim period to align their systems, policies, and obtain necessary approvals.
Does the view-only facility allow customers to download loan application forms?
Yes, the directions explicitly state that banks providing view-only facility can provide downloadable forms for facilities like loans. However, the actual loan processing or fund movement cannot be done through the digital channel without transactional authorisation.