Reserve Bank of India (Urban Co-operative Banks - Branch Authorisation) Directions, 2025
UR
- Applies toUrban co-operative banks
- StatusIn force
- IssuedNov 28, 2025
- Amendmentsnone tracked
- Length80 points in 5 sections · 7 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
| one percent | The bank's capital ratio must be one percentage point above its minimum. RBI Para 9(1) |
| 15 per cent | An eligible bank may open branches up to 15 per cent of last year's count. RBI Para 20 |
| two years | The bank can be barred from opening new branches for the next two years. RBI Para 27 |
| three years | And an unbroken net profit for the last three years. RBI Para 44(4) |
| 30 days | A customer unanswered for 30 days may go to the RBI Ombudsman. RBI Para 61 |
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.
Chapter I. Preliminary
1. Starts at once
The rules start the moment RBI issues them.
2. Who must follow this
These rules apply to every urban co-operative bank.
3. What an urban bank means
An urban co-operative bank is a primary co-operative bank under the banking law.
Chapter II. Role of Board of Directors
1. The board owns the policies
The board must approve separate policies for branches, agents and doorstep work.
Chapter III. Branch Authorisation
Must know
1. The old test is gone
The Financially Sound and Well Managed test has been replaced.
2. Capital above the floor
The bank's capital ratio must be one percentage point above its minimum.
3. Bad loans under three
Net bad loans must not be more than 3%.
4. Profit for two years
The bank must show net profits in the preceding two financial years.
5. No reserve shortfall
There must be no failure to keep the cash and liquidity reserves.
6. Core banking fully in
Core banking software must be fully in place.
7. Not under any action
The bank must not be under RBI directions or corrective action.
8. Two professional directors
The board must carry at least two professional directors.
9. Good until September
The eligibility holds until 30 September of the next financial year.
10. A wrong claim costs
A bank found wrongly claiming eligibility can lose self-review for a year.
11. The home district is free
The bank may cover its whole district of registration with no permission.
12. Three more districts, no permission
An eligible bank may add three districts of its choice inside its state.
13. Five districts in a year
Beyond that, RBI's approval is needed and the yearly cap is five districts.
14. Small banks are limited
Only a Tier 3 or Tier 4 bank may go outside its own state.
15. Fifty crore to leave
To cross the state border the bank needs a net worth of at least 50 crore.
16. Two states in a year
Even then only two new states a year are allowed.
17. Capital for five branches
The bank must hold spare capital for at least five branches in each new state.
18. A second board first
A Tier 2 bank or above must form a Board of Management before it expands.
19. No objection lasts 180 days
A no objection certificate from RBI is valid for 180 calendar days.
20. Ask before any new place
Branches, counters, cash machines and back offices all need prior permission.
21. Opening without it is illegal
Opening a place of business without approval breaks the law and draws penalty.
22. Fifteen per cent free
An eligible bank may open branches up to 15 per cent of last year's count.
23. Machines at a branch
Cash machines at a branch or counter need no RBI approval.
24. Machines elsewhere need eligibility
An off-site machine inside the area of operation needs the bank to be eligible.
25. Thirty branches to a controller
A controlling office is allowed for a cluster of not less than 30 branches.
26. One at least, ten most
That works out to a minimum of one branch and a maximum of 10.
BankPulse example. A bank ended last March with 40 full branches. Fifteen per cent of 40 is six, so it may open six branches on its own this year. A bank with four branches works out at less than one, so RBI gives it one branch. A bank with 200 branches works out at 30, so RBI gives it 10 branches.
27. Only if old ones cleared
The free route is open only if every existing branch is properly authorised.
28. Ninety days for an answer
RBI decides on a complete branch application within 90 calendar days.
29. The order cannot be changed
Branches are approved strictly in the order of preference the bank gave.
30. Open three of every four
Failing to open 75% of approved branches in time is taken seriously.
31. Two years shut out
The bank can be barred from opening new branches for the next two years.
32. No outside loans
A salary earners' bank's byelaws must not allow loans to outsiders.
33. A thousand members
It also needs at least 1000 members at the place where it wants a branch.
34. Where a counter may go
Inside a college, big office, factory or hospital the bank already banks for.
35. Not in a market
No counter in a marketplace or shopping centre, and one only per premises.
36. Ten kilometres from the branch
The base branch must be within 10 kilometres of the counter.
37. Ten lakh at a counter
A counter may pay out other loans only up to 10.00 lakh.
38. No outside ads on screens
Other people's products must not be advertised on the cash machine screen.
39. Moving inside town is free
A branch or office may move within the same city, town or village freely.
40. Closing needs no approval
Any place except the head office may be closed without RBI approval.
41. Weak banks must ask first
A bank short of the section 11 capital needs approval to sell or take premises.
42. Sign nothing before approval
It must not commit to premises before RBI has given its approval.
Do it
43. The bank checks itself
The bank decides its own eligibility on the audited figures as at 31 March.
44. Thirty days after the audit
The bank must put its eligibility check to the board within 30 days.
45. Tell RBI in fifteen days
RBI must be told within 15 calendar days of the board resolution.
46. Fifteen days after registration
Go back to RBI within 15 calendar days of registering the changed byelaws.
47. A written branch policy
The board must approve a written policy for opening branches.
48. One plan a year
For more branches the bank files one annual business plan in the year.
49. Open it before March
An approved branch must open by March 31 or the approval lapses.
50. One month before shifting
Customers get at least one month's notice before a branch moves.
51. Two months before closing
Depositors and clients get two months' notice before a branch shuts.
52. Send back the licence
The original branch licence goes back to RBI within 15 calendar days.
Background
53. A split district is automatic
If a district is split or reorganised the area changes without RBI approval.
Chapter IV. Business Facilitator (BF) / Business Correspondent (BC) Model
Must know
1. Capital above ten for agents
To use agents the bank needs a capital ratio of more than 10 %.
2. Bad loans under five
It also needs net bad loans of less than 5 %.
3. Profit for three years
And an unbroken net profit for the last three years.
4. Directors and staff are barred
Directors, their relatives and serving employees cannot act as agents.
5. The bank carries the blame
Every customer contract must say the bank answers for what the agent does.
6. Thirty kilometres, five in cities
An agent must be within 30 kms of the base branch, 5 kms in a metro.
7. No sub agents under one
An individual agent cannot appoint sub-agents of his own.
8. The bank charges, not agent
Only the bank may collect service charges, and openly.
9. Thirty days then the Ombudsman
A customer unanswered for 30 days may go to the RBI Ombudsman.
10. Know your customer stays yours
The duty to check customer identity stays with the bank.
Do it
11. Same day or next day
An agent's transactions must reach the bank's books by the next working day.
12. The agent charges nothing
The agreement must stop the agent charging the customer directly.
Chapter V. Doorstep Banking
1. Doorstep service needs no approval
The bank may offer doorstep banking on its own, without asking RBI.
2. Bigger banks may use agents
A Tier 3 or Tier 4 bank may use its own staff or agents at the door.
3. Smaller banks use own staff
A Tier 1 or Tier 2 bank may use only its permanent employees.
Chapter VI. Information Reporting
1. Late reporting shuts the door
Late or wrong reporting can bar new branches for up to three years.
2. Seven days to report
Opening, closing, merging or shifting goes on the RBI portal within seven days.
3. Fifteen days to report
Anything not needing approval must still be reported in 15 calendar days.
Chapter VII. Repeal and other Provisions
1. It replaces its own twin
It repeals a rulebook of the same name issued days earlier.
2. Old actions still stand
Anything done under the old rules stays governed by those old rules.
3. Old approvals still count
Approvals given under the repealed rules now come under these rules.
4. Other laws still apply
These rules add to other laws. They do not cut them down.
5. RBI's reading is final
If a rule is unclear, RBI's reading of it binds everyone.
The same subject for other kinds of institution
The same subject for other kinds of institution.
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 customer service and fair conduct rules for urban co-operative banks 2025
RBI deposit interest rate rules for urban co-operative banks 2025
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