The urban co-operative banks with strong corporate
governance can now set up offsite ATMs as the Reserve Bank
of India (RBI) has relaxed rules for this. Before, UCB had
to take approval from RBI to set up an off-site ATM.
After relaxation in rules the banks having lower bad loans,
three consecutive years of profit and professionals on
their board can set up off-site ATM with out the prior
approval from RBI.
RBI said along with profit requirement, banks will have to
hold their net non-performing assets below 5% and must have
at least two professionals on their board to be eligible to
set up ATMs without approval.
In case a bank has ever defaulted on meeting its cash
reserve ratio or statutory liquidity ratio requirement, or
bank’s capital adequacy ratio fell below 10% in the
preceding year then also bank cannot set up off-set ATM.
According to RBI’s older guidelines, to be eligible to set
up an ATM bank must have operating profit for three
proceeding years, the net NPA should be less than 10% and
they have to maintain the minimum prescribed capital
adequacy ratio- which is 9%.
Also, earlier it was not necessary for banks to have
professional members on the board and nothing was mentioned
about defaults on maintaining CRR and SLR.
While in its new guidelines, regarding the approval RBI has
also stated that regulatory will have full say on issues
like track record of compliance with the provisions of
Banking Regulation Act, 1949, RBI Act, 1934, and the
instructions or directions issued by RBI from time to time.
A senior official from a UCB said, “The only liberalization
is that if an UCB is eligible as per new norms, it does not
have to seek prior approval from RBI to set up offsite
Earlier in 2001 after Madhavpura Co-operative Bank had
suffered huge losses on account of securities scam, RBI did
not issue any issuing fresh branch license to urban
Also, these banks were not allowed to freely set up offsite
ATMs, instead it was made mandatory that all commercial
banks have to come up with an annual plan on branch and ATM
In its April policy, RBI had stated that well-managed UCBs
will have to submit annual business plans having details
where they plan to open new branches on off-site ATMs.
In the April policy, RBI had said well-managed UCBs are
required to submit annual business plans detailing where
they plan to open new branches on off-site ATMs. The
central bank said in its policy, “In order to further
improve the banking infrastructure, it has been decided to
liberalize the approach to set up offsite ATMs by UCBs.
Accordingly, it is proposed to allow well-managed UCBs to
set up offsite ATMs without seeking approval through the
annual business plans”.