Reserve Bank of India (Rural Co-operative Banks - Branch Authorisation) Directions, 2025

1. Starts at once

The rules start the moment RBI issues them.

2. Who must follow this

These rules apply to every rural co-operative bank.

3. Which banks those are

State co-operative banks and central co-operative banks, as the NABARD law defines them.

1. One test for most permissions

RBI has set one eligibility test that most permissions now hang on.

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. Clear with both watchers

The bank must not be under directions or corrective action of RBI or NABARD.

8. Good until September

The eligibility holds until 30th September of the next financial year.

9. A wrong claim costs

A bank found wrongly claiming eligibility can lose self-review for a year.

10. The state decides the area

A district central bank's area of operation is settled by the state government.

11. No objection letter not needed

For that byelaw change the bank needs no no objection letter from RBI.

12. Ask before any new place

Branches, counters, cash machines and back offices all need prior permission.

13. Opening without it is illegal

Opening a place of business without approval breaks the law and draws penalty.

14. Fifteen per cent free

An eligible bank may open branches up to 15 per cent of last year's count.

15. Machines at a branch

Cash machines at a branch or counter need no RBI approval.

16. Machines elsewhere need eligibility

An off-site machine inside the area of operation needs the bank to be eligible.

17. A controller always needs approval

A controlling office always needs RBI's prior approval.

18. A controller does no business

A controlling office must not bring in business of its own.

19. It cannot become a branch

A controlling office cannot be turned into a branch, or a branch into one.

20. An old counter upgrades

A counter running more than three years can be turned into a branch.

21. Spare capital is needed

The bank needs enough headroom capital before it uses the free route.

22. One at least, ten most

That works out to a minimum of one branch and a maximum of 10.

23. Only if old ones cleared

The free route is open only if every existing branch is properly authorised.

24. Where the apex may go

In the state capital, and one branch per district with no district bank branch.

25. The district bank needs people

A district central bank needs a centre of at least one lakh people.

BankPulse example. A district central co-operative bank wants a branch in a town of 60,000 people. The free route is shut to it there, because RBI's census test names a centre of one lakh. So the bank files the yearly plan and waits for RBI's answer instead.

26. Ninety days for an answer

RBI decides on a complete branch application within 90 calendar days.

27. The order cannot be changed

Branches are approved strictly in the order of preference the bank gave.

28. Open three of every four

Failing to open 75 per cent of approved branches in time is taken seriously.

29. Two years shut out

The bank can be barred from opening new branches for the next two years.

30. The apex bank is limited

A state co-operative bank may normally open only in the state capital.

31. At the district headquarters

There the apex bank may open only to hold and serve co-operative bank deposits.

32. Where the district bank fails

The apex bank may step in where the district bank is missing or defunct.

33. The north east is freer

An apex bank of a north-eastern state may open or shift anywhere in its area.

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. Doorstep service needs no approval

The bank may offer doorstep banking on its own, without asking RBI.

42. A thousand crore for agents

Only a bank with deposits above 1000 crore may use agents at the door.

43. Others use own staff

Every other bank may use only its permanent employees.

44. Weak banks must ask first

A bank short of the section 11 capital needs approval to sell or take premises.

45. Sign nothing before approval

It must not commit to premises before RBI has given its approval.

46. Thirty days after the audit

The bank must put its eligibility check to the board within 30 days.

47. Tell both in fifteen days

RBI and NABARD must both be told within 15 calendar days.

48. The premises must be clean

The lease must be valid and free of any dispute with the landlord.

49. A written branch policy

The board must approve a written policy for opening branches.

50. Open it before March

An approved branch must open by March 31 or the approval lapses.

51. The registrar must recommend

In all those cases the state registrar's recommendation is needed.

52. One month before shifting

Customers get at least one month's notice before a branch moves.

53. Two months before closing

Depositors and clients get two months' notice before a branch shuts.

54. Send back the licence

The original branch licence goes back to RBI within 15 calendar days.

55. Keep the records ready

The papers must be kept and shown to RBI or NABARD when asked.

56. Tell RBI about the scheme

RBI is told of the doorstep scheme within 15 calendar days of starting it.

57. The board reviews it yearly

The board looks at how the doorstep scheme is working once a year.

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 for the rest

Anything not needing approval is still reported in 15 calendar days.

4. Write to NABARD, not RBI

Every application goes first to the NABARD regional office.

5. Send RBI a copy early

An advance copy of the application also goes to the RBI regional office.

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.