RBI Guidelines For Opening a New Place of Business by District Central Co-Operative Banks 

On August 11^th 2022, the Reserve Bank of India (“RBI”) published the guidelines on Section 23 of the Banking Regulation Act, 1949 (as applicable to Co-operative Societies) – opening of a new place of business by District Central Co-operative Banks (DCCBs)[1] and issued guidelines outlining the requirements and procedure for DCCBs to submit applications for the same or the installation of ATMs.

Criteria for the opening of the new place of business

A DCCB must meet the following requirements before opening branches, extension counters, specialized branches, regional offices, zonal offices, administrative offices, shifting of branches, or upgrading extension counters into full-fledged branches:

• A licenced DCCB should have run its business for at least three years.
• Capital to Risk (Weighted) Assets Ratio (CRAR) should not have fallen below 9%.
• There should have been no failure to maintain the cash reserve ratio/statutory liquidity ratio during the preceding financial year.
• A net non-performing asset should be less than 5%.
• The bank ought to have generated a profit during the preceding two financial years.
• The bank should have a good track record of regulatory compliance and shouldn’t have faced any financial penalties for the violation of RBI’s directions or rules during the last two financial years.
• The bank should not have been placed under any specific direction issued by RBI during the preceding two financial years.

Procedure For Opening A New Place Of Business

DCCBs meeting the requirements may submit their application in the format prescribed in the Banking Regulation (Co-operative Societies) Rules, 1966 to the concerned Regional Office (RO) of the RBI and a copy of the application to NABARD for prior approval for opening branches, extension counters, specialized branches, regional offices, zonal offices, administrative offices, shifting of branches, or upgrading extension counters into full-fledged branches.

DCCBs are permitted to set up on-site ATMs without taking prior permission from the RBI. Without seeking prior approval from the RBI, DCCBs may also set up off-site/mobile ATMs in their operational regions, provided they meet the requirements outlined. Additionally, DCCBs must make sure that their Board of Directors has duly approved the proposal for the installation of off-site/mobile ATMs. Following the operationalisation of the off-site/mobile ATMs, DCCBs are required to submit a report to the concerned RO of the RBI and obtain authorization under Section 23 of the Banking Regulation Act of 1949 (AACS) from the concerned RO of the RBI. However, DCCBs have to comply with the following conditions for the operation of off-site/mobile ATMs:

• According to the most recent inspection report, the DCCB should be CBS compliant and meet the eligibility requirements.
• The transactions made at off-site ATMs must be documented in the financial records of the respective branch/base branch/Centralized Data Centre.
• Mobile ATMs should be linked to a branch and will only be allowed to operate in the bank’s service region.
• Only the security guard will be posted at such an off-site ATM centre.
• DCCB must make sufficient standby arrangements to satisfy the ATM’s cash needs.
• DCCB must make sure that only notes that have been properly sorted and checked are dispersed through the ATM.
• Wheelchair users and other people with disabilities should be provided facilities of ramps and arrangements should be made in such a manner that a wheelchair user can operate an ATM without being hindered by its height.
• At least one-third of newly installed ATMs must be talking ATMs with Braille keypads, and they must be strategically placed in consultation with other banks to ensure that each locality has access to at least one talking ATM with a Braille keypad to meet the needs of people who are blind or visually impaired. 
• Third-party advertisement such as the display of products of other manufacturers/dealers/suppliers is not allowed on ATM screens/networks.
• Off-site/mobile ATMs may be installed with the Board of Directors’ approval. However, the same would be subject to the directions issued by the RBI for the closure/shifting of any such off-site/mobile ATMs.

DCCBs are also allowed to offer all their goods and services through the ATM channel as long as the technology allows for it and adequate safeguards are put in place to avoid misuse of the channel.

– Shilpi Pandey, Senior Associate

[1] https://rbidocs.rbi.org.in/rdocs/notification/PDFs/DCCBSECF44D9F6DBE64D978A71F872D00A04DC.PDF