Reserve Bank of India (Urban Co-operative Banks – Responsible Business Conduct) Directions, 2025 (Updated as on July 1, 2026)

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.

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.

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.

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.

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.

1. Notice on the drop-box

The drop box must carry a notice that cheques may also be given at the counter.

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.

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.

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. Overdraft closure capped

On an overdraft, the closure charge cannot exceed 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.

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.

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.

1. Older rules cancelled

This document cancels the earlier conduct rules for these institutions.

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.