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Corporate Laws Central Ministry of Finance Reserve Bank of India Act, 1934

Reserve Bank of India (Urban Co-operative Banks - Licensing, Scheduling and Regulatory Classification) Guidelines, 2025

28-Nov-2025 | RBI/DOR/2025-26/269

RBI has issued RBI (Urban Co-operative Banks - Licensing, Scheduling and Regulatory Classification) Guidelines, 2025 effective from 28th November 2025. Key Highlights: 1. Due to the diverse nature of UCBs, RBI introduced a tiered regulatory framework to balance cooperative principles of smaller banks with the expansion needs of larger banks. 2. No new Urban Co-operative Banks (UCBs) will be licensed, and co-operative credit societies will not be converted into UCBs. 3. Based on recommendations of an Expert Committee, RBI issued a revised four-tier framework on December 1, 2022, replacing the earlier two-tier model. After the 2022 framework and FSWM (Financially Sound and Well Managed) criteria, RBI updated the norms for UCBs to be included in the Second Schedule of the RBI Act, 1934. 4. UCB Categorization (based on deposit size) - a. Tier 1: UCBs with deposits up to Rs.100 crore, including unit and salary earners' banks. b. Tier 2: Deposits above Rs.100 crore and up to Rs.1000 crore. c. Tier 3: Deposits above Rs.1000 crore and up to Rs.10,000 crore. d. Tier 4: Deposits above Rs.10,000 crore. 5. If a UCB moves to a higher tier due to increased deposits, it gets up to three years to meet the higher regulatory norms. As per Government notification, only licensed Tier 3 and Tier 4 UCBs meeting FSWM standards and maintaining Tier 3 level deposits for two consecutive years, are eligible for scheduled status. 6. To be included in the Second Schedule, a UCB must have - a. CRAR at least 3% above the minimum requirement, and b. No major supervisory concerns. c. Eligible banks must apply to the RBI with the required board resolution and financial documents. For more information, please refer to the attached document.

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