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Cooperative Banking

UCBs can now open new branches without prior approval of RBI

Urban Co-operative Banks are now permitted to open new branches within their approved area of operation without the need for prior approval from the Reserve Bank of India (RBI). They can open up to 10% or a maximum of 5 branches, based on the number of branches they had in the previous financial year. However, to take advantage of this opportunity, UCBs must have their board’s approval and adhere to the Financially Sound and Well Managed (FSWM) Norms.

In order to rationalise the process of branch opening and to enable the UCBs to tap growth opportunities in the sector, it has been decided to grant general permission for branch expansion in the approved area of operation to financially strong UCBs. This is as per the Revised Regulatory Framework for Urban Co-operative Banks (UCBs) released by RBI on July 19, 2022 based on the recommendation of the Expert Committee on Primary (Urban) Co-operative Banks.

In addition to the general permission, the branch expansion under the prior approval route as per the existing framework will also continue, as hitherto, for other eligible UCBs. However, the process has been simplified to reduce the time taken for granting approvals for opening new branches. The revised instructions shall come into force with immediate effect. This circular is applicable to all Primary (Urban) Co-operative Banks (except Salary Earners’ Banks)

UCBs can also do one time settlement at par with commercial banks. RBI has notified a framework governing this aspect for all regulated entities including UCBs. Now co-operative banks through board-approved policies may provide process for technical write-off as well as settlement with borrowers. This has brought cooperative banks at par with other commercial banks now.

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