ž ú ö Ä ÿˆå RESERVE BANK OF INDIA UBD.LS (PCB) MC. No.14/ / July 1, 2013

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1 ž ú ö Ä ÿˆå RESERVE BANK OF INDIA RBI/ /29 UBD.LS (PCB) MC. No.14/ / July 1, 2013 All Primary (Urban) Co-operative Banks Dear Sir, Master Circular on Area of Operation, Branch Authorisation Policy, Opening/ Upgradation of Extension Counters, ATMs and Shifting/Splitting/Closure of Offices Please refer to our Master Circular UBD.LS (PCB) MC. No.14/ / , dated July 2, 2012 on the captioned subject. This Master Circular consolidates and updates all the instructions/guidelines issued on the subject up to June 30, Please acknowledge receipt of this Master Circular to the Regional Office concerned of this Department. Yours faithfully (A.K.Bera) Principal Chief General Manager शहर ब क वभ ग,क य क य लय, ग रम ट ह ऊस, पहल म ज़ल, ड ए ब र ड, वरल, म बई भ रत फ न: ; फ स: / ; ई म ल: cgmincubd@rbi.org.in Urban Banks Department, Central Office, Garment House, 1 Floor, Dr.A.B.Road, Worli, Mumbai , India Phone: ; Fax: / ; cgmincubd@rbi.org.in ब क ह द म पऽ च र क व गत करत ह च त वन : भ रत य रज़व ब क र ई-म ल, ड क, एसएमएस य फ न क ल क ज रय क ई भ य गत ज नक र ज स ब क ख त क य र, प सवड आ द नह म ग ज त ह यह धन रखन य द न क त व भ नह करत ह ऐस त व क कस भ क र स जव ब मत द जए Caution: RBI never sends mails, SMSs or makes calls asking for personal information like bank account details, passwords, etc.it never keeps or offers funds to anyone. Please do not respond in any manner to such offers.

2 Master Circular Area of Operation, Branch Authorisation Policy, Opening/Upgradation of Extension Counters, ATMs and Shifting/Splitting/Closure of Offices CONTENTS Sl. No. Particulars Page 1 Area of operation 1.1 Introduction 1 No. 1.2 Extension of Area of Operation within the district of registration and its adjoining districts within the State of Registration 1.3 Extension of Area of Operation beyond the adjoining districts and to the entire State of registration of Uni-State Banks 1.4 Extension of Area of Operation beyond the adjoining districts and to the entire State of registration of Multi State Banks Classification of Urban Cooperative Banks Extension of Area of Operation beyond the State of registration and extension of Area of Operation of Multi-State Urban Cooperative Banks 3 2 Branch Authorisation Policy 2.1 Introduction Authorisation Policy -Eligibility Criteria Authorisation Policy - Unit banks to open a new general category branch 2.4 Authorisation Policy- Other than a unit bank desiring to open a branch at a higher category centre 2.5 Authorisation Policy Banks which desires to open a branch at a centre, other than its district of registration but within the state of registration Selection of Centres Unauthorized Extension Counters 5

3 2.8 Mobile / Satellite Offices Annual Business Plan - Considerations Annual Business Plan List of Centres Approval for Centres Authorisation for opening of new place of business its Validity Period Authorisation - Validity Period Opening of Branches without a valid Authorisation Penal action for incorrect information Procedural Guidelines for Permission to open branches 6 3 Opening of Extension Counters 3.1 Eligibility criteria and application procedure Policy Approach Norms for Opening Extension Counters Safe Deposit Lockers Facility at Extension Counters Up-gradation of Extension Counters into full fledged branches - 8 Eligibility 3.6 Up-gradation as equivalent to allotment of centre Up-gradation Period required Shifting / Relocation of branches 8 4 Automated Teller Machines(ATMs) 4.1 On-site ATMs Off-site ATMs - Eligibility Criteria Off-site ATMs Procedure/Formats Facilities to be provided at Off-site ATMs 9 5 Shifting/Splitting/Closure of Offices 5.1 Shifting of Offices Report to be submitted to Reserve Bank 10

4 5.3 Shifting to a different locality / municipal ward, licensed UCBs 10 satisfying the criteria of FSWM UCBs 5.4 Shifting branches from one city to another Shifting branches - Application Splitting or Part Shifting of Branches within the Same 11 Locality/Municipal Ward 5.7 Report of shifting Closure of Branches and Extension Counters 11 6 Shifting, Acquisition, Surrender of leased premises, etc. of UCBs not categorized as Financially Sound and Well Managed (FSWM) 6.1 UCBs not categorised as Well Managed and Financially sound- 12 shifting, acquisition, surrender of leased premises etc. 6.2 Application Format 12 7 Authorisation Policy for Salary Earners' Banks 12 8 Submission of wrong information Penalty Provisions 13 9 Resolution of Board of Directors Branch Banking Statistics- Submission of Quarterly Returns Acquisition of Accommodation on Lease / Rental Basis by Primary Co-operative Banks for their use i.e. for Office and Residence of Staff 11.1 Review by Head offices of Banks Report List of branches/offices operating in disputed premise 15

5 Annex I Annex II Annex III Annex IV Annex V Annex VI Annex VII Annex VIII Annex IX Annex X Annex XI AnnexXII Annex XIII Annex XIV Annex XV Appendix I Entry Point Norms Profile of the bank Financial Position as per audited balance sheet Board Resolution approving the plan of action as approved by Board for opening of branches and particulars of centres at which bank proposes to open branches Board Resolution approving the plan of action as approved by Board for opening Off-site ATMs and particulars of centres at which bank proposes to open Off-site ATMs Information to be submitted along with Annual Business Plan (ABP) Headroom Calculation Format CRAR Calculation Format Information to be submitted along with the application for Off-site ATMs Information to be submitted along with the application for Off-site ATMs Format of declaration of the institution in the premises of which extension counter is to be opened Report on shifting of an office by an UCB in cases where prior approval of RBI is not required Format for application for obtaining prior approval of RBI for shifting to a different locality / municipal ward Format for application for UCBs not classified as Well Managed and Financially sound for obtaining prior approval of RBI for shifting, sale/surrender of premises etc. Particulars of branches / offices where there is a dispute relating to Acquisition of Premises on Lease / Rental Basis List of circulars consolidated in the Master Circular

6 Master Circular on Area of Operation, Branch Authorisation Policy, Opening/Upgradation of Extension Counters, ATMs and Shifting/Splitting/Closure of Offices Area of Operation Introduction 1.1 Area of Operation of a primary (urban) co-operative bank (UCB) means the geographical area/s as defined in its bye-laws, approved by the registering authority. UCBs may expand their Area of Operation through a resolution passed by the general body and getting the amended bye-laws registered with the Registrar of Co-operative Societies (RCS)/Central Registrar of Cooperative Societies (CRCS). Banks are required to seek prior permission (No Objection Certificate) from the Reserve Bank of India for such revision, wherever applicable. Regulatory Requirements Extension of Area of Operation within the district of registration and adjoining districts within the State of registration 1.2 Licensed Tier I and Tier II UCBs satisfying the criteria stated below may extend their area of operation to the whole of the district of registration and to its adjoining districts within their State of registration, without prior permission from the Reserve Bank of India subject to satisfying the following norms: (a) CRAR not being less than 10 per cent; (b) Net NPAs being less than five per cent; (c) No default in the maintenance of CRR / SLR during the preceding financial year; (d) Continuous net profit for the last three years; (e) Sound internal control systems with at least two professional directors on the Board; and (f) Regulatory comfort based on, inter-alia, record of compliance with the provisions of Banking Regulation Act, 1949 (AACS), RBI Act, 1934 and the instructions / directions issued by RBI from time to time. The Urban Co-operative Banks, which fulfill the above stated six norms, are called Financially Sound and Well Managed (FSWM) UCBs. 1

7 Such FSWM UCBs need not approach Reserve Bank of India for seeking no objection for extension of area of operation as stated above. Such banks may directly approach the RCS of the State concerned for extension of area of operation to the entire district of registration and its adjoining districts within the State of registration. Extension of Area of Operation beyond the adjoining districts and to the entire State of registration 1.3 The uni-state Tier II UCBs may extend their area of operation to the entire State of Registration on fulfilling the conditions stipulated for FSWM UCBs. 1.4 Tier II UCBs registered or deemed to be registered under the Multi-State Co-operative Societies Act, 2002 satisfying the criteria for FSWM UCBs will be permitted to extend their area of operation to the entire State of original registration. RBI will consider requests for expansion of area of operation to the entire state from licensed Tier II UCBs or UCBs registered or deemed to be registered under the Multi-State Co-operative Societies Act, 2002 and which fulfil the above criteria stated for FSWM UCBs as per the last RBI inspection. Also the Assessed Net Worth (ANW) of such FSWM UCBs should not be less than the entry point capital norms prescribed for the highest category centre in that district(s), applicable to a new general category bank, as indicated in Annex I. While considering such applications, RBI will give due consideration to system of internal controls prevailing in the bank and supervisory comfort. UCBs desirous of extending their area of operation to the entire state may approach the Regional Offices of Reserve Bank of India for prior approval. 1.5 For the purpose of classification of UCBs into Tier I and II, the following definition may be adopted for all regulatory purposes in super-session of instructions contained in circular RBI Circular UBD. (PCB). Cir.No.35/ /07-08 dated March 7, 2008: Tier I Banks: (i) Banks having deposits below ` 100 crore operating in a single district; (ii) Banks with deposits below ` 100 crore operating in more than one district will be treated as Tier I provided the branches are in contiguous districts and deposits and advances of branches in one district separately constitute at least 95 per cent of the total deposits and advances respectively of the bank; and 2

8 (iii) Banks with deposits below ` 100 crore, whose branches were originally in a single district but subsequently, became multi-district due to reorganisation of the district may also be treated as Tier I UCBs. Tier II Banks: All other Banks Note: The deposit and advances as referred to in the definition may be reckoned as on 31st March of the immediate preceding financial year. Extension of Area of Operation beyond the State of registration and Extension of Area of Operation of Multi-State UCBs 1.6 Financially sound and well managed (FSWM) UCBs that have a minimum assessed net worth of ` 50 crore, will henceforth, be allowed to extend their area of operation beyond the State of registration as also to any other State/s of their choice subject to the criteria stipulated for them as laid down in Para 1.2 above. Branch Authorisation Policy Introduction 2.1 In terms of Annual Policy Statements for the year and , it was decided to liberalise and rationalise the branch authorisation norms for Financially Sound and Well Managed (FSWM) UCBs in the States that have signed Memorandum of Understanding (MoU) with Reserve Bank of India and those registered under Multi-State Cooperative Societies Act, The present policy is given in the following paragraphs. Authorisation Policy - Eligibility Criteria 2.2 Financially sound and well managed (FSWM) UCBs will be eligible to open branches/extension counters (ECs) in their approved area of operation beyond the current annual ceiling of 10 per cent and upgrade ECs which are in operation for more than three years, provided they have the required headroom capital (prescribed in Annex VII) in terms of assessed net worth (ANW) per branch, including existing branches (methodology given in Annex VII) and subject to fulfillment of the six criteria laid down in Para 1.2 above. Such FSWM UCBs should maintain a minimum CRAR of 10 per cent on a continuous basis with minimum ANW commensurate with the prevalent entry point capital norms for the centre where branch is 3

9 proposed / where it is registered. Entry point norms for various categories of UCBs are given in Annex I. 2.3 Banks which have been organised as unit banks and have been extended relaxation in the entry point capital as indicated in Annex I, would be eligible to open branches only after augmenting their Assessed Net Worth (ANW) to the level required for opening a new general category bank at the place where the bank was organised or where the branch is desired to be opened, whichever is higher. For instance, if a unit bank was organised at a category D centre and it intends to open a branch at a B category centre, such bank s ANW should necessarily be raised to entry point capital prescribed for organising a general category bank at a B category centre. 2.4 Similarly if a bank, other than a unit bank, desires to open a branch at a higher category centre, other than the centre at which it was established, within the district of its registration, the ANW of the bank should at least be equivalent to the entry point capital prescribed for that centre. Illustratively, if a bank situated at C category centre intends to open a branch at B category centre, in the same district, its ANW should be equivalent to the entry point capital prescribed for B category centre. 2.5 However, a bank which desires to open a branch at a centre, other than its district of registration but within the state of registration, must have ANW not less than the entry point capital required for organisation of a new general category bank at the highest category centre in that state. Illustratively, if a bank registered in district X desires to open a branch in district Y within its state of registration, then its ANW should not be less than the entry point capital required for highest category centre in the state. Selection of Centres 2.6 UCBs, satisfying the above mentioned norms may prepare an Annual Business Plan (ABP) for opening of branches (including extension counters and up-gradation of extension counters into full-fledged branches, in their existing area of operation, for the next 12 months, with the approval of their Board of Directors and submit the ABP, in duplicate, along with Annexes II, III, IV and VI to the respective Regional Offices of Reserve Bank of India. The plan may be submitted preferably by end of December of the previous financial year. 4

10 2.7 Where the banks have opened extension counters without complying with the prescribed norms and subsequently approach Reserve Bank of India for up-gradation of the same into fullfledged branches, such banks would not be allotted centres unless they close unauthorised extension counters. Further, a centre where a bank has opened an unauthorised extension counter, such a centre would not be considered for opening a branch in future. 2.8 Scheduled UCBs which comply with the eligibility norms indicated at Para 1.2 above may open mobile/satellite offices. Such of the scheduled banks which desire to open mobile/satellite offices may indicate the same in the format as per Annex IV enclosed to this circular along with other centres where they intend to open branches. 2.9 Banks need not indicate the exact address of the proposed branch in the ABP but may only indicate the place of business including the name of the town/city within their area of operation, in the order of their preference, where they desire to open branches. Banks should choose the centres at which they wish to open branches after careful consideration of business potential and availability of premises at such centres A list of centres where a bank desires to open branches under the ABP should be indicated in the format as per Annex IV enclosed to this circular, and only one application need to be sent. The banks should not submit statements/ annexes, which are not required/called for, but submit only the requisite information/data, along with a certified copy of the latest audited balance sheet (as of 31 March) or a copy of the published Annual Report of the bank. Approval for Centres 2.11 The banks which comply with the prescribed norms (Para 1.2) will be allotted centres strictly in the order of preference given by them. Once a centre is allotted, no request for change in the allotted centre would be entertained. Authorisation and its Validity Period 2.12 A valid authorisation from the Reserve Bank of India is required for opening a new place of business including extension counters, off-site ATMs or changing the location of any existing place of business (except to the extent permitted vide paragraphs 5.1 to 5.5) under Section 23 of the BR Act, 1949 (AACS). After making arrangements for opening of branches, the bank should approach the Regional Offices of Urban Banks Department under whose jurisdiction they 5

11 operate, in the prescribed Form V, indicating the exact postal address of the place where the branch is to be opened, for issuance of authorisation within a period of six months from the date of allotment of the centre Authorisation will be valid for one year from the date of issue, or one and a half year from the date of allotment of the centre, whichever is earlier. Ordinarily, no extension of time will be granted after the expiry of validity period of licence. Only in exceptional cases, where the bank is unable to open the branch for reasons beyond its control, an extension of time not exceeding six months may be granted by the Regional Offices, under advice to Central Office Opening of branches without a valid authorisation from the Reserve Bank is an act of violation of Section 23 of the BR Act, 1949 (AACS), and liable to attract penalties In case, the information/particulars furnished by any bank are found to be incorrect, the Reserve Bank of India will take a serious view in the matter and the bank will be liable for penal action, including debarring it from allotment of centres for a period of three years. Procedural Guidelines for Permission to open branches 2.16 Banks should ensure that there are no restrictions imposed by the local development or other authorities for setting up commercial establishment in the locality where the branch is proposed to be opened. Opening of Extension Counters Eligibility criteria and application procedure 3.1 Eligibility criteria and application procedure for opening of Extension Counters are prescribed in paragraphs 2.2 to Policy Approach 3.2 ECs may be opened within the premises of educational institutions, big offices, factories and hospitals of which the concerned UCB is the principal banker. Request from other banks to the institution may be considered, only if opening of an EC is not considered feasible by the principal banker and/or its base branch is beyond 10 kilometers from the EC, after obtaining written consent from principal banker. UCBs may submit declaration from the institution in which 6

12 it proposes to open EC in the format as per Annex XI. ECs may also be opened in the residential colonies provided no other branch/ec is already existing in the colony and no restrictions have been imposed by the local development or any other authorities for setting up a commercial establishment in the residential colony/ locality. No extension counter should be opened in market place, shopping centre, etc. Norms for Opening of Extension Counters 3.3 A bank desiring to open ECs should comply with the following norms. (a) Only one EC is permitted within the premises of any institution / office / hospital or in a residential colony. (b) Base branch of the bank to which the proposed extension counter is linked should be within a distance of 10 kilometers to facilitate incorporation of transactions of EC in the accounts of the base branch on a day-to-day basis. (c) While opening an extension counter, the bank should take into account important factors such as need, viability and overall merits of opening of the EC. (d) ECs should not be opened merely for collection of fees, payment of bills for electricity, water, telephones, etc. as it is primarily the responsibility of the institution concerned. (e) The facilities at an extension counter should be restricted to deposit / withdrawal transactions; issue and encashment of drafts and mail transfers; issue and encashment of travellers' cheques; collection of bills; advances against fixed deposits of their customers (within the sanctioning power of the officials concerned at the EC); and disbursement of other loans (only for individuals) sanctioned by the Head Office / base branch up to the limit of ` lakh only. (f) Such of the banks which have opened ECs, without seeking prior permission from RBI, will have to close down the same and these would not be considered for regularization / upgradation into full-fledged branches. 7

13 Safe Deposit Locker Facility at Extension Counters 3.4 The permission to provide the facility of safe deposit lockers may be granted on merit to banks which comply with following criteria. (a) The bank should have complied with the prescribed capital adequacy norms. (b) The bank's net NPAs should be less than seven per cent of its net loans and advances. (c) The bank should have posted net profit for the last three consecutive years. (d) UCBs intending to provide safe deposit lockers at their extension counters should ensure that the institution in whose premises the extension counter is/proposed to be opened is agreeable for the provision of such facility and adequate security arrangements are in place at the premises. Up-gradation of Extension Counters into Full-Fledged Branches 3.5 Eligibility criteria and application procedure for up-gradation of extension counters (ECs) are prescribed in paragraphs 2.2 to Up-gradation of extension counters into a branch is treated as equivalent to allotment of centre for opening of a branch. Only such of the ECs as have been accorded post-facto approval by the Reserve Bank of India or opened with the prior approval of the Reserve Bank of India will be considered for up-gradation into a branch. 3.7 Up-gradation of the extension counters is permitted after completion of three years of their operation as extension counters. 3.8 The shifting / relocation of these branches, if considered necessary by the bank, would be permitted subject to the following conditions: (a) The proposal is for shifting / relocation of the converted branch within the city / town limit. (b) Banking services to the existing customers of the extension counter, including the institutional customer, are ensured. 8

14 (c) No new extension counter will be allowed in the institution in which the extension counter is housed presently. Automated Teller Machines (ATMs) On-site ATMs 4.1 UCBs satisfying the criteria of financially sound and well managed (FSWM) UCBs as stated at Para 1.2 above, may set up on-site ATMs without prior approval of the Reserve Bank of India. Off-site ATMs Eligibility criteria and application procedure 4.2 Approvals for opening off-site ATMs in respect of FSWM UCBs will henceforth be considered outside Annual Business Plans, subject to conditions laid down in Para 1.2 above and maintenance of a minimum CRAR of 10 per cent on a continuous basis with minimum ANW commensurate with entry point capital norms for the centre where the off-site ATM is proposed/where the bank is registered. 4.3 UCBs, satisfying the above mentioned norms may prepare an application for opening Offsite Automated Teller Machines, as per their requirement, in their existing area of operation, with the approval of their Board of Directors and submit the same, in single copy, along with Annexes III, V, VII and VIII to the respective Regional Office of Reserve Bank of India. 4.4 The following facilities may be provided at off-site ATMs. (a) PIN changes (b) Requisition for cheque books (c) Statement of accounts (d) Balance enquiry (e) Inter-account transfer - restricted to accounts of the same customer at the same centre (f) Banks may provide telephone connection between the "stand alone" ATMs with branch ATMs and Shared Payment Network System (SPNS). However, no person other than security guard should be posted at such non-branch stand-alone ATM centers. (g) UCBs are free to share / interlink their ATMs with other banks. 9

15 Shifting / Splitting / Closure of Offices Shifting of Offices 5.1 Licensed UCBs satisfying the criteria of Financially Sound and Well Managed (FSWM) UCBs as stated at para 1.2 above may shift their place of business, including administrative office, located in the semi-urban areas anywhere within the same town, irrespective of distance vis-àvis other banks/offices, etc. without prior permission of the Reserve Bank of India. As regards banks located in urban / metropolitan centers, shifting within the same locality / municipal ward is permitted in respect of licensed UCBs satisfying the criteria of FSWM UCBs as stated at para 1.2 above without prior permission of the Reserve Bank of India. 5.2 A report in the format, as per Annex XII should be submitted in duplicate to the Regional Office concerned of this Department within a month from the date of shifting where RBI's prior approval is not required. 5.3 For shifting to a different locality / municipal ward, licensed UCBs satisfying the criteria of FSWM UCBs as stated at para 1.2 above are required to obtain prior permission and may submit their application as per the format in Annex XIII. Shifting branches from one city to another 5.4 The requests of UCBs (other than Unit banks) to shift their branches from one city to another in their area of operation within the same State will be considered subject to their compliance with the following conditions: (a) The new centre is of the same or lower population group as the existing centre e.g. a branch at a 'D' centre can be shifted to another 'D' centre only; and (b) A branch located in under-banked district can be shifted to another centre in under-banked district only. The shifting should be beneficial to the bank in terms of cost and business. 5.5 UCBs desiring such shifting are required to submit their applications in this regard to the Regional Office concerned of the Urban Banks Department for prior permission. 10

16 Splitting or Part Shifting of branches within the Same Locality/Municipal Ward 5.6 Splitting of branches or part shifting of some of the departments of parent office/branch can be made to a near by location within the same locality/municipal ward due to space constraints and for better customer service or for convenience of the members, irrespective of the distance vis-à-vis other offices/banks, without prior permission of the Reserve Bank of India subject to the condition that identical business is not conducted from both the premises. 5.7 A post-facto report to this effect, in the format as mentioned in Para 5.2 above, should be submitted in duplicate to the Regional Office concerned within one month from the date of shifting. Closure of Branches and Extension Counters 5.8 UCBs are allowed closure of un-remunerative branches/extension counters without prior permission of RBI subject to the following conditions. (a) Bank should not have been placed under any directions under section 35A of the Banking Regulation Act, 1949 (AACS). (b) Decision to close down extension counters/branches should be taken by the Board after taking into account all the relevant factors and should be properly minuted in the official record of proceedings of the Board meeting. (c) Bank should give proper notice to all existing depositors/ clients of the branch through press release in local leading newspapers as well as in the form of circular letter to each constituent of the branch, well in advance of closure of the branch. (d) It should return the original licence/s issued for the closed branch to the Regional Office concerned of this department. (e) The disposal of the premises occupied by the erstwhile branch should be reported to our Regional Office concerned and the RCS. (f) Bank should not open extension counter at the same place after closure of branch/es. 11

17 (g) Bank should report to the Regional Office concerned of Reserve Bank of India, in Form VI prescribed under Rule 8 of Banking Regulations (Co-operative Societies) Rules, 1966 after closing the branches, within one month from the date of closure, along with copies of the relative Board resolution. (h) The bank should preserve all the relevant records and make them available to Reserve Bank inspection team for scrutiny during the course of inspection. Shifting, Acquisition, Surrender of leased premises, etc. of UCBs not categorized as Financially Sound and Well Managed (FSWM) 6.1 UCBs, which do not satisfy the criteria of financially sound and well managed (FSWM) UCBs as stated at para 1.2 above and not complying with section 11 (1) of BR Act, 1949 (AACS), will be required to obtain prior approval of the Reserve Bank of India and / or Registrar of Co-operative Societies for: (a) Sale of bank's own premises; (b) Surrender of existing premises taken on lease/rental basis; (c) Acquisition of new premises on ownership or lease/rental basis; and (d) Shifting of offices/departments as a result of sale of premises/surrender of premises/ acquisition of new premises. 6.2 Such banks are required to submit their application in enclosed format given at Annex XIV in duplicate to the Regional Office concerned. Authorisation Policy for Salary Earners' Banks 7. In view of their special status the salary earners' banks (SEBs) have not been covered under ABP for opening of new branches. Requests for allotment of centres may be considered only from licensed SEBs on their fulfilling certain specified norms. SEBs fulfilling the under-noted norms may apply for opening of branches. (a) The bye-laws should not contain provision for giving loans to outsiders (non-employees) by enrolling them as members/nominal members. (b) There should at least be 1000 members at a place where the SEB desires to open a branch. (c) It should comply with the regulatory framework prescribed by RBI. (d) It should have posted net profits during each of the preceding two years. 12

18 (e) Its net NPAs should be less than 10 per cent of its net loans and advances as on the last balance sheet date and it should have made requisite provisions as per RBI guidelines. (f) CRAR of the bank should not be less than that prescribed by RBI from time to time. (g) In case a bank desires to open a new branch within its district of registration, its Assessed Net Worth (ANW) should, at least be equal to the entry point capital norms indicated in Annex I for opening a new general category bank at that centre where the bank was organised or where the branch is desired to be opened, whichever is higher. Illustratively, if a SEB organised in the "C" category centre desires to open a branch in "B" category centre within its district of registration, its ANW should be at least equivalent to the entry point capital norm prescribed for "B" category centre. (h) SEB desirous to open a branch, outside its district of registration but within the State of registration, should have ANW not less than the entry point capital norm prescribed for opening a new general category bank at the highest category centre in that State. The entry point capital norms prescribed are indicated in Annex I enclosed to this circular. (i) SEBs, which satisfy the norms indicated above, may prepare and get their branch expansion programme approved by their Board of Directors and forward the same to the Regional Office concerned of the Urban Banks Department giving information in Annexes I, II & III enclosed to our circular UBD BL (SEB) No.5A/ / dated August 8, Annex III indicating classification of assets and provision made against non-performing assets should be duly certified by Statutory Auditor/Chartered Accountant under his stamp and signature. Once a centre is allotted no request for change in the allotted centre would be entertained. On receipt of the allotment letter the banks may make preliminary arrangements for opening the branches and submit applications in Form V for issue of branch authorisation/s, within six months from the date of allotment of the centre. The banks should note to open the branches only after obtaining branch authorisation and within the validity period of the branch authorisation. No request for extension of time for opening the branch will be entertained except in the circumstances beyond the control of the bank. Submission of Wrong Information 8. It may be carefully noted that in case the information/particulars furnished by a bank is found incorrect, Reserve Bank of India would take a serious view in the matter and the bank 13

19 concerned would be liable for penal action, including debarring it from allotment of centres for the next three years. Resolution of Board of Directors 9. The proposals of UCBs for extension of Area of Operation, opening of branches, extension counters etc., shifting of offices, splitting of branches, etc. should be sent only with the prior approval of the bank's Board of Directors and appropriate resolutions in this behalf should be passed. The relevant resolutions should be submitted to the Regional Offices concerned while approaching them for prior / post-facto approval therefor. The relevant records may also be preserved and made available to the Reserve Bank's inspection team for scrutiny during the course of inspection. Branch Banking Statistics - Submission of Quarterly Returns Revision of Proforma I and Proforma II 10. With a view to streamlining and updating the system of compilation of branch banking data, maintained by the Department of Statistics and Information Management (DSIM), Central Office, Bandra Kurla Complex, Mumbai and Regional Offices of UBD, the Proforma I & II submitted by banks have been revised in order to include details in respect of Not Administratively Independent Offices (NAIOs) like Extension Counters, Satellite Offices, ATMs etc. The quarterly Proforma I and II should be submitted by all UCBs to DSIM and Regional Offices of UBD. The detailed instructions in this regard are given in our circular UBD.CO.LS.Cir.No. 43/ / dated May 9, Acquisition of Accommodation on Lease / Rental Basis by Urban Co-operative Banks for their Use i.e., for Office and Residence of Staff 11.1 The authorisations issued for opening of bank branches / offices are location-specific in as much as, in terms of the extant instructions, Reserve Bank of India issues authorisation / permission for opening a bank branch / office at a particular centre based on the exact postal address of the place where the branch / office is to be opened. In the circumstances, it is incumbent upon banks to ensure that their branches are operating from premises, which have a subsisting and valid lease agreement, free of any dispute between the bank and the landlords of the premises in question. Therefore, Head Offices of banks were advised to undertake a review in this regard. 14

20 11.2 Banks are required to furnish quarterly progress reports (as at the end of March, June, September and December) as per the format given at Annex XV to enable RBI to take a view on the appropriateness, or otherwise, of continuing the authorization for the branch / office which is functioning in a 'disputed' premises, to the RD of the Regional Office of RBI concerned, within a period of one month from the close of the respective quarter to which the report relates. It may be noted in this regard that in respect of branches / offices situated in Maharashtra, the information will be furnished by banks to the Chief General Manager, Urban Banks Department, Reserve Bank of India, Mumbai Regional Office, Garment House, 2nd Floor, Dr. Anne Besant Road, Worli, Mumbai

21 Annex I Entry Point Norms In the tables below A, B, C and D denote centres with the following population: Category of centre A B C D Population Over 10 lakh 5 lakh and above but less than 10 lakh 1 lakh and above but less than 5 lakh Less than 1 lakh I. Entry Point Norms for General Category Particulars A B C D Assessed Net Worth (` lakh) Membership II. Entry Point Capital Norms for Unit Banks /Banks organised by Mahilas/SCs/STs and those organised in less developed States Particulars A B C D Assessed Net Worth (` lakh) (50% of EPN) Membership III. Entry Point Norms for Banks organised in least developed States/North-Eastern States/Tribal Regions Particulars A B C D Assessed Net Worth (` lakh) (33.33% of EPN) Membership (66.67% of normal membership)

22 ANNEX II Profile of the bank 1. Name and address of the bank 2. Licence No. and date of licence 3. Area of Operation (as approved by RBI) 4. Whether bank has an elected Board of Directors? 5. If so, whether there are two professional directors? 6. No. of existing branches (List of branches to be annexed), their location and the population of the centre where the branch is located as per latest census 7. No. of existing extension counters (List to be annexed) with address 8. No. of existing Off Site ATMs (List to be annexed) with address 9. Whether there were / are any default in CRR/SLR (If yes, give details and the reasons for the same) 17

23 ANNEX III Financial Position as per audited balance sheet (latest) Name of the bank: (` lakh) Sl. Particulars No. 1 Share capital 2 Reserves 3 Deposits 4 Borrowings 5 Loans and Advances 6 Percentage of priority sector advances to the outstanding loans and advances 7 Credit Deposit Ratio 8 Net profit 9 10 Gross NPAs@ 11 Net NPAs@ 12 Provisions made towards NPAs as per RBI guidelines@ 13 Net Worth As at the end of March of the Certificate from the Statutory Auditors to be enclosed 18

24 ANNEX IV Name of the bank: Board Resolution approving the plan of action for opening the branches and the particulars of centres at which the bank proposes to open branches Name of the centre with address and Pin code No. Population of the centre Name of the district Whether the proposed centre, is within bank's area of operation Note: Reasons for the proposed branch including adequacy of banking facilities at the centre, business prospects at the proposed place of business within 12 months (an estimate of minimum business which the UCB expects to attract). A viability study report (as per proforma given below) for the proposed branch containing the potential available in the area, estimate of income and expenditure and likely period of break-even etc. may be submitted. Name of centre and district Population of centre No.of bank branches at centre Population expected to be served 1st year Deposits 2nd year 3rd year 1st Year Advances 2nd Year 3rd Year Estimated Income Estimated Expenditure Profit/Loss 1st year 2nd year 3rd year 1st year 2nd year 3rd year 1st year 2 nd year 3rd year 19

25 ANNEX V Name of the bank: Board Resolution approving the plan of action for opening Off Site ATMs and the particulars of centres at which the bank proposes to Off Site ATMs Name of the centre with address and Pincode No. Population of the centre Name of the district Whether the proposed centre, is within bank's area of operation Note: Indicate briefly the benefits expected to accrue by way of installation of ATMs, cost involved, etc. 20

26 ANNEX VI Name of the bank: Information to be submitted along with Annual Business Plan 1. Medium Term policy for branch expansion programme of the bank Bank may furnish details of the proposed Medium Term Policy for its branch expansion inclusive of branches & ATMs for a period of 3 years 2. Expected level of business in the next 3 yearsa. Deposits b. Advances 3. Expected level of capital augmentation required for the branch expansion and measures proposed to meet the same in order to maintain CRAR at a minimum of 10% on a continuous basis 4. Technology implementation a. No. of branches fully computerised b. No. of branches with net work connectivity c. No. of branches with Core Banking Solution (CBS) The bank may also submit a brief write-up on the existing technological infrastructure, various technology initiatives undertaken and the proposed enhancement/upgradation of technology for achieving its business goals in the medium term. 5. Measures to promote financial inclusion 6. Steps proposed to be taken by the bank to ensure that the quality of customer service does not get adversely affected due to expansion of branches. 7. Details of complaints received and disposed of during the last two years 8. Measures proposed by the bank to address the following issues arising out of scaling up of operations due to the proposed branch expansiona. internal control and audit b. Housekeeping and reconciliation c. Other areas of Operational risk d. HR issues 9. Any other information 21

27 ANNEX- VII (To be submitted along with Annual Business Plan) Steps for arriving at Headroom in terms of ANW per branch for allotment of branches (` lakh) Name of the bank ANW* as on March 31 st Less ANW utilized for existing branches (including those allotted but not yet opened) No. of Centres ANW utilized A Centre ` 200 lakh per branch B Centre ` 100 lakh per branch C Centre ` 75 lakh per branch D Centre ` 50 lakh per branch Available Headroom for allotment of branches during 20 - Proposed branches ANW for proposed branches A Centre ` 200 lakh per branch B Centre ` 100 lakh per branch C Centre ` 75 lakh per branch D Centre ` 50 lakh per branch Available headroom after allotment of proposed branches * assessed as per latest RBI inspection 22

28 ANNEX VIII To be submitted along with Annual Business Plan Expected CRAR after considering the probable business on branches allotted / to be allotted (say during 20 - and 20 ) Name of the Bank (` lakh) CRAR as on March 31st Capital Funds as on say, March 31, 20 Add 2.5% of probable first year advances for branches to be opened in 20 - Add 2.5% of probable first year advances for branches to be opened in 20 - Total expected capital funds after one year Risk Weighted Assets as on March 31st Add 100% of probable advances for branches allotted for 20 - Add 100% of probable advances for branches to be opened during 20 - Total expected RWA after one year. Likely CRAR after one year 23

29 ANNEX IX Information to be submitted along with application for Off-site ATMs 1. Name and address of the bank 2. Licence No. and date of licence 3. Area of Operation (as approved by RBI) 4. Whether bank has an elected Board of Directors? 5. If so, whether there are two professional directors? 6. No. of existing branches (List of branches to be annexed), their location and the population of the centre where the branch is located as per latest census 7. No. of existing extension counters (List to be annexed) with address 8. No. of existing Off Site ATMs (List to be annexed) with address 9. Whether there were / are any default in CRR/SLR (If yes, give details and the reasons for the same) 24

30 ANNEX X Information to be submitted along with application for Off-site ATMs Name of the bank: 1. Technology implementation 1.1 No. of branches fully computerised 1.2 No. of branches with net work connectivity 1.3 No. of branches with Core Banking Solution (CBS) The bank may also submit a brief write-up on the existing technological infrastructure, various technology initiatives undertaken and the proposed enhancement/upgradation of technology for achieving its business goals in the medium term. 2. Any other information 25

31 Annex XI Format of declaration of the institution in the premises of which the extension counter is to be opened Date: 1. We have requested to open its (Name of the bank) extension counter in the premises of (Name and full address) of the institution) for the benefit of the following persons attached to the above * Workers.. ) ) * Staff/Employees.. ) Please indicate actual ) numbers separately * Students... ) ) * Teachers (where there are more than one institution being managed by the authority issuing this letter which are also to be benefited by the extension counter, the names of these institutions, their distance from the proposed location of the extension counter, the number of students/staff, etc. attached separately to each of the institutions, the name and the distance of their bankers should also be indicated separately.) * Strike out whichever is not applicable. 2. (a) (Name of the bank and place) is our principal banker. We also deal with the following bankers (give names of bankers and their distance from the institution) (b) Extent of our Accounts with the principal banker and other bankers as on 20. (latest position please) 26

32 Name of the bank Type of account/s Amount Maintained Rs. lakh We undertake to provide necessary accommodation for the extension counter within the premises of our institution (mentioned at Sr. No.1 above) 4. We have no objection to the bank to provide safe deposit lockers and allow outsiders also to have access to the extension counter. 5. If the extension counter is allowed to a bank other than the principal banker, the reasons therefor. 6. Whether a similar letter to any other banker for the purpose has been issued. (Signature of Competent Authority on behalf of the institution mentioning designation and seal, if any) 27

33 Annex XII Report on shifting of an office by an Urban Cooperative bank in cases where prior permission of Reserve Bank of India is not required 1 2 (i) Name of the bank (ii) (a) Address of the head office/central Administrative office (iii)total number of bank branches (iv) Name of the office/department(s) which has/have been shifted and date of shifting (v)old address of the aforesaid office department (vi) Please mention the licence No./Permission No. for opening the office/department(s) referred to at item (iv) above (vii) New address of the aforesaid office/departments (viii) Distance between the old and new addresses (ix) Whether the entire office/all departments functioning at the old address has/have been shifted to the new address or only a part of the office/some departments has/have been shifted? (x) Reasons for shifting (xi) How the premises at the old address {Sr.No. (v) } will be utilized after the shifting? Will they be surrendered to the landlord or disposed of? (i) Whether the city/town in which the office is located is semi-urban, or urban or metropolitan (as per last Census)? Please specify (ii) Whether the locality to which the office has been shifted is a) predominantly residential b) predominantly commercial c) an industrial area Licence No. Permission No. Dated 28

34 (iii) Are there any branches of other urban cooperative or commercial banks within 400 meters from the new address? If so, give details (i.e. names and distances from new location) (iv) Is any other urban cooperative or commercial bank also located in the same building wherein the office has now been shifted or in the building adjoining or opposite it? If so, give details. 3 (i) Have the new premises been acquired on lease/rent or self-constructed or purchased? Please specify (ii) (a) If taken on lease/rent, are the lease/rental terms as per guidelines contained in our circular UBD.No.(PCB) Cir.87/ /94 dated June 30, 1994? (b) If not, what are the deviation(s)? (c) Reason for permitting the deviation(s) (d) Has the bank s Board passed a resolution allowing the deviations? (If so, enclose a copy of the resolution) (iii) If the new premises have been purchased/self-constructed has the bank obtained permission of the Registrar for investment of funds? (If so, attach a copy of the Registrar s orders). If not, explain the reasons why permission is not obtained? 4 Shifting of a bank's Head Office/ Administrative Office (within the same locality) In case the bank has shifted its Head Office/Administrative office, will the bank's registered address also change? If so, has the bank taken necessary action in this regard as required under the State Cooperative Societies Act? Has the bank sent a separate intimation of change of registered address to Urban Banks Department of Reserve Bank of India (Central Office and Regional Office) as required under the guidelines? Will the bank's bye-law need amendment? (Please attach two copies of the 29

35 bye-laws). 5. I hereby certify that the above information is true to the best of my knowledge and belief. Signature (Name of the Bank's Chief Executive Officer) Date : Forwarded to : The Reserve Bank of India Urban Banks Department Regional Office Encls : Note : Please submit this Annex as also the necessary enclosures/documents/ sketch-maps etc. in duplicate. 30

36 1. (i) Name of the bank Annex XIII Information to be furnished by an urban cooperative bank for obtaining prior approval of Reserve Bank of India for shifting its office/departments to a different locality/municipal Ward (ii)(a) Address of the Head Office/Central Administrative Office (b) Registered address of the bank (iii) Total no. of bank's offices (iv) Name of the office/department/s which is/are proposed to be shifted. (v) Licence No./Permission No. for opening the office/ department/s referred to at Sr.No.(iv) above Licence No. Permission No. Dated : (vi) Address of the present location of office/department/s at Sr. No.(iv) (vii) Address of the location to which office/department/s at Sr.No.(iv) is/are proposed to be shifted. (viii) Distance between the old and new address (ix) Whether all departments/entire office of the bank presently functioning at address at Sr.No.(vi) above are/ is proposed to be shifted? (x) If answer at item (ix) is "No", please mention Yes/No. (a) Names of all departments/offices functioning at existing premises. (b) the departments which will continue to function at the existing place after the proposed shifting. (xi) Reasons for shifting 2. (i) Whether the city/town in which the office/department/s in question is/are located in semi-urban, urban or a metropolitan centre? Please specify. (ii) Whether the locality to which the office/department is to be shifted is- (a) predominantly residential (b) Predominantly commercial 31