The Reserve Bank of India (RBI) has recently made an important announcement regarding District Central Co-operative Banks (DCCBs). These banks are now permitted to close their un-remunerative branches without seeking prior permission from the central bank, although they will require approval from the Registrar of Cooperative Societies of the respective state. This decision aims to streamline the functioning of DCCBs and ensure that the process of branch closure is carried out responsibly and transparently.
DCCBs, in order to close a branch, will have to follow a specific decision-making process. The decision to shut down a branch should be taken by the Board of the bank. This decision should be based on a thorough evaluation of various relevant factors and the entire process should be properly recorded and minuted during the Board meeting.
Notification to Depositors and Clients
To ensure transparency and minimize inconvenience to depositors and clients, DCCBs must provide a two-month notice in advance of the branch closure. This notice should be published in local leading newspapers through a press release. Additionally, the bank must communicate this information well in advance to every constituent of the branch.
When a DCCB decides to close a branch, they are required to return the original license or licenses issued for that particular branch to the Regional Office of the RBI that is concerned with their operations. This step is essential to maintain proper records and regulatory compliance.
Exception to the Rule
It is important to note that DCCBs will not be allowed to close branches if they are subject to any restrictions imposed by the RBI. This exception ensures that branches are not closed haphazardly, especially in situations where regulatory concerns are in place.
Name Change Procedure
In another circular issued by the RBI, the central bank has laid down a clear procedure for cooperative banks wishing to change their names. This aims to ensure that the renaming process is executed in a regulated and well-documented manner.