RBI comes up with master direction ' business authorization for Co-operative banks

The Reserve Bank of India (RBI) has announced Master Direction – Business Authorization for Co-operative Banks (Directions), 2025 today. The provisions of this Direction shall apply to all co-operative banks, i.e., Primary (Urban) Co-operative Banks (UCBs), State Co-operative banks (StCBs) and District Central Co-operative banks (DCCBs). The central bank noted that based on a comprehensive review, it has been decided to replace the Financially Sound and Well Managed (FSWM) norms for UCBs with harmonised eligibility criteria for all banks for certain business authorizations/permissions/approvals. These criteria will be referred to as Eligibility Criteria for Business Authorization (ECBA). Any reference to FSWM criteria in any other circular issued by the Reserve Bank may, henceforth, be considered as a reference to compliance with ECBA.

It noted that prior permission from the Reserve Bank is required for opening a new place of business including Branches, Extension Counters, ATMs, Controlling Offices (Regional/ Zonal/Administrative Office), Central Processing Centres, Regional Collection Centres, Retail Asset Processing Centres, Service Branches, Back Offices etc. or for changing the location of any existing place of business under Section 23 of the BR Act, 1949 read with Section 56 thereof. Opening a new place of business without valid authorization from the Reserve Bank, unless otherwise permitted by the Reserve Bank, is a violation of the said Act and is liable for penal action. The bank should ensure that there are no restrictions imposed by the local development or other authorities for setting up a commercial establishment in the locality where the new place of business is proposed to be opened.

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