Reserve Bank of India (Urban Co-operative Banks – Responsible Business Conduct) Directions, 2025 (Updated as on July 1, 2026)
UR
- Applies toUrban co-operative banks
- StatusIn force
- RBI text changedRBI's text for this document has changed since BankPulse last read it. BankPulse is re-reading it.
- IssuedNov 28, 2025
- Last amendedAug 06, 2026 · 5 incorporated
- Length82 points in 5 sections · 8 min read
The four dates on this rule
- PublishedNov 28, 2025The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyNov 28, 2025The day this rule starts to apply, as RBI's own text states it.
- Time to get readyNoneIt starts to apply on the day it was published.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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Numbers to remember
| 30 days | Changes in service charges over the past 30 days must be on display. RBI Para 45(2) |
| seven working days | If a customer reports later than seven working days, the bank's own policy decides liability. RBI Para 58 |
| three working days | A request to reactivate a dormant account must be settled within three working days. RBI Para 138 |
| ₹5,000 | Where the delay is the lender's fault, the borrower gets ₹5,000 for each day of delay. RBI Para 266 |
| 85 per cent | If an auction fails twice, the floor price must be at least 85 per cent of value. RBI Para 290 |
| two years | Pledged gold or silver left more than two years after repayment is treated as unclaimed. RBI Para 298 |
What it says
How firm is each point
Stated by RBI — RBI’s own paragraph says this. We have only made it plainer.
Our reading — BankPulse read RBI’s paragraph and shortened it. The paragraph is the authority, not this line.
Needs judgement — RBI leaves this to the bank to settle, so nobody can give you a fixed number here.
Can be read two ways
A point marked this way sits on an RBI paragraph that can honestly be read two ways. Our own sentence takes one of the two. BankPulse does not choose for you: read RBI’s own paragraph, at the number printed on the point, before you act on it.
Two ways — both, or either one. RBI’s paragraph joins two things in the and-or form. One reading: Both of them apply, together. The other: Either one of them, on its own, is enough.
Chapter I. Preliminary
1. Fair conduct for UCBs
This document sets how urban co-operative banks must treat their customers.
2. Who is covered
These Directions apply to every urban co-operative bank.
Chapter IV. Customer Guidance and Protection
Must know
1. Thirty days of changes shown
Changes in service charges over the past 30 days must be on display.
2. Seven days changes the rule
If a customer reports later than seven working days, the bank's own policy decides liability.
Do it
3. Notice board kept current
The notice board must be updated from time to time.
4. Board in local languages
The notice board must be in two languages in Hindi speaking states and three elsewhere.
5. Cap on value-based charges
A charge based on value may only cover extra cost, and it must have a ceiling.
6. Charges told upfront
Full information on charges for basic services must be given upfront and in time.
7. Warning before a rise
Customers must be told in advance before service charges change.
8. Alerts must be sent
Message alerts must be sent. Email alerts may be sent where the customer registered.
Background
9. Charges only with reason
For a basic service to a person, a charge may be levied only if it is just and reasoned.
10. No mobile, no online use
A customer who gives no mobile number gets no electronic transactions beyond ATM cash.
11. Loss after reporting
Any loss after the customer reports the fraud is borne by the bank.
Chapter V. Financial Inclusion and Accessibility
1. Court order to follow
The lender must take steps to comply with the Supreme Court order of 30 April 2025.
2. Basic account is free
A basic savings account carries the listed facilities free, with no minimum balance.
3. Cheque book of 25 leaves
A basic savings account gets a cheque book of at least 25 leaves a year.
4. No charge for new passbook
Issuing a continuation passbook when the old one is full carries no charge.
5. Four free withdrawals
A basic savings account gets at least four free withdrawals in a month.
Chapter VI. Payment and Remittance Services
1. Notice on the drop-box
The drop box must carry a notice that cheques may also be given at the counter.
Chapter VII. Deposit and Other Liabilities
Must know
1. Minor accounts stay in credit
An account of a minor must never be allowed to go into overdraft.
2. Three days to reactivate
A request to reactivate a dormant account must be settled within three working days.
3. No unfair locker terms
Unfair terms cannot be put into a locker agreement.
Do it
4. Charges must be reasonable
Service charges must be reasonable and near the average cost of the service.
5. Deposit cover shown
The passbook must carry the deposit insurance cover and its limit.
6. Warn minors before eighteen
A minor account holder must be told in advance what is needed on turning eighteen.
7. Board approves locker policy
The Board must approve a policy for the safe deposit locker service.
8. Nothing illegal in lockers
The locker agreement must bar keeping anything illegal or dangerous inside.
9. Waiting list for lockers
If no locker is free, the application must be acknowledged and given a waiting number.
10. Board approves locker agreement
The locker agreement itself must be approved by the Board.
Chapter VIII. Responsible Lending Conduct
Must know
1. No interest on penalties
Penal charges cannot be capitalised. No further interest may run on them.
2. No penalty on a penalty
A fresh penal charge cannot be added on top of penal charges already due.
3. Charge base on early closure
Closing an overdraft early: the pre-payment charge is worked out on an amount not above the sanctioned limit.
4. Disclosed or not charged
A prepayment charge that was not disclosed as required cannot be charged at all.
5. ₹5,000 a day for delay
Where the delay is the lender's fault, the borrower gets ₹5,000 for each day of delay.
BankPulse example. Suppose the lender is 12 days late through its own fault. The borrower is owed ₹5,000 for each of those days. That comes to ₹60,000.
6. Floor price after two failures
If an auction fails twice, the floor price must be at least 85 per cent of value.
7. Lender cannot bid
The lender and its related parties cannot bid in its own auction.
8. Two years makes it unclaimed
Pledged gold or silver left more than two years after repayment is treated as unclaimed.
9. No tall gold loan claims
Misleading advertisements with unrealistic claims about gold loans are barred.
Do it
10. Key Facts in plain language
That statement must be written in a language the borrower understands.
11. Explained and acknowledged
The statement must be explained to the borrower, who signs to say it was understood.
12. Full cost and schedule
The statement must carry the annual percentage rate and the repayment schedule.
13. Receipts for charges
Where the lender collects such charges, a receipt must reach the borrower in good time.
14. Summary box in the agreement
The statement must also appear as a summary box inside the loan agreement.
15. Penalty only on the default
Penal charges must be reasonable and charged only on the amount in default.
16. Board policy on penal charges
The Board must approve a policy on penal charges by whatever name they are called.
17. Same penalty for all
Within a loan product, penal charges must be the same whoever the borrower is.
18. Reminders state the penalty
A reminder about a breach must state the penal charge that applies.
19. Statements must be simple
The statements sent to a borrower must be simple and easy to understand.
20. Papers back on time
The sanction letter must state when and where the property papers will be returned.
21. Borrower watches the testing
The borrower must be present when the gold or silver is tested at sanction.
22. Surprise checks required
Internal audit must make surprise checks of the pledged metal and keep a record.
23. Auction in the same district
The first auction must be held in the district of the lending branch.
24. Full auction account
After the auction the borrower must be told the price fetched and the dues settled.
25. Board approves microfinance code
The microfinance fair practices code must be approved by the Board.
26. One standard agreement
Microfinance loans must use a standard agreement in the borrower's language.
27. Loan card in plain words
Every entry in the loan card must be in a language the borrower understands.
28. Board policy on staff conduct
The Board must approve a policy on staff conduct, hiring, training and monitoring.
29. Conduct affects pay
How staff treat customers must count in how they are paid.
30. Free training for borrowers
Any training offered to borrowers must be free of cost.
31. Separate recovery complaints
There must be a separate route for complaints about recovery.
32. Told at disbursal
The borrower must be told about that route when the loan money is paid out.
33. Police check on agents
Agent staff must be checked, and that check includes police verification.
34. Borrower told who calls
The borrower must be given the recovery agent's details before recovery starts.
Background
35. Key Facts for term loans
A Key Facts Statement is required for every retail and small business term loan.
36. Bound by the stated terms
The lender is bound by the terms in that statement if the borrower agrees in time.
37. Unpaid interest at normal rate
Interest on unpaid interest runs at the contracted rate, not the penal rate.
38. No extra interest component
No new component may be added to the rate of interest to work around these rules.
39. Website link is not enough
Pointing to a schedule on the website does not meet the disclosure duty.
40. Switch at next renewal
Existing loans move to the new penal charge rules at the next review or renewal.
41. Lender's own call is free
No charge applies where the lender itself asks for the loan to be repaid early.
42. Other rights stay
That payment does not take away any other compensation the law allows.
43. Gold stays in the branch
Gold and silver may be handled only in branches and only by the lender's own staff.
44. Vaults, not cupboards
The metal may be stored only in branches with a vault fit for the purpose.
45. Other products need consent
Any non-credit product needs full consent, with its fees written in the loan card.
46. Microfinance prepayment free
No prepayment charge may be taken on a microfinance loan.
47. Late charge on overdue only
A delayed payment charge applies to the overdue amount, not the whole loan.
48. No harsh recovery
Neither the lender nor its agent may use harsh methods to recover dues.
49. Checks before hiring agents
A due diligence process is required before engaging any recovery agent.
Chapter X. Repeal and Other Provisions
1. Older rules repealed
This document repeals RBI's earlier instructions on responsible business conduct for urban co-operative banks.
2. Old actions preserved
Anything already done under the old rules stays governed by those old rules.
3. Approvals carried over
Approvals given under the cancelled rules are now treated as given under these rules.
4. Other laws still apply
These Directions add to other laws. They do not replace any of them.
How this rule has changed
The points above are the rule as it stands today, after every change listed here.
Issued on Nov 28, 2025. This is the date RBI put the rule out.
Changed on Dec 04, 2025. Takes effect From April 1, 2026. Exceptions and conditions are stated in the amendment..
- BSBD must be offered. Every urban co-operative bank must offer a basic savings bank deposit account as a regular service to all customers.
- No BSBD minimum balance. Urban co-operative banks must not ask for any minimum balance in a basic savings bank deposit account.
- Free ATM card. The ATM or ATM-cum-debit card for a basic savings bank deposit account must be free, including annual and renewal fees.
- Free continuation passbook. Urban co-operative banks must not charge when they issue a continuation passbook after the earlier passbook pages are used.
Changed on Apr 29, 2026.
- Temporary branches. In a calamity, a bank can use temporary branches but must inform the Reserve Bank of India office.
- Temporary beyond 30 days. If temporary premises continue beyond 30 days, the bank must get approval from the Reserve Bank of India office.
- Alternate service points. Banks must set up satellite offices or similar facilities in affected areas and inform the Reserve Bank of India.
- Restore ATM services. Banks must quickly restore automated teller machine services and give other ways to meet cash needs meanwhile.
Changed on Jun 15, 2026.
- Start date. These amended rules will apply from January 1, 2027.
- Define compulsory bundling. Compulsory bundling means forcing a customer to take another product or service to get the one they want.
- Define explicit consent. Explicit consent means a clear recorded choice or action showing agreement to a specific arrangement with the bank.
Changed on Jun 24, 2026.
- Card not present. Card Not Present has the same meaning as in the 2025 authentication rules.
- Card present. Card Present has the same meaning as in the 2025 authentication rules.
- EBT meaning. Electronic banking transaction has the same meaning as electronic funds transfer in the Payment and Settlement Systems Act, 2007.
- Unauthorised EBT meaning. Unauthorised electronic banking transaction is one not approved by the customer, including those due to bank negligence or third-party breach.
Changed on Aug 06, 2026.
- Start date. These rules will apply from January 1, 2027.
- Scope of recovery rules. These rules cover all Urban Co-operative Bank loan recovery, including taking security possession.
- UCB recovery policy. Each Urban Co-operative Bank must frame a clear policy for loan collection and recovery, including security possession.
- Compensation in policy. The recovery policy must include how borrowers or guarantors will be paid for losses from wrong recovery actions.
The same subject for other kinds of institution
The same subject for other kinds of institution.
RBI customer service and fair conduct rules for all India financial institutions
RBI customer service and fair conduct rules for commercial banks
RBI customer service and fair conduct rules for local area banks
RBI customer service and fair conduct rules for payments banks
RBI customer service and fair conduct rules for regional rural banks
RBI customer service and fair conduct rules for rural co-operative banks
RBI customer service and fair conduct rules for small finance banks
Other RBI rules for urban co-operative banks
RBI capital adequacy rules for urban co-operative banks 2025
RBI compliance officer and compliance function rules for urban co-operative banks
RBI concurrent audit rules for urban co-operative banks 2026
RBI credit bureau reporting rules for urban co-operative banks 2025
RBI credit card and debit card rules for urban co-operative banks 2025
RBI deposit interest rate rules for urban co-operative banks 2025
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