The Reserve Bank of India (RBI) on Thursday allowed all cooperative banks to offer Internet banking services to their customers.
In a notification on its website, the central bank said any urban cooperative bank (UCB), state cooperative bank (StCB) and district central cooperative bank (DCCB) that has implemented the core banking solution in full will be allowed to provide non-transactional services to their customers.
Core banking solution refers to linking of various branches of a bank with a common computerised system, which allows customers to access their bank account from any branch, irrespective of where they opened the account. This is typically useful in retail banking services.
The non-transactional services include balance enquiry, balance viewing, account statement download, request for supply of cheque books, etc., RBI said in its notification.
The commencement of these services will have to be reported to the regional office of the RBI and also to the National Board for Agriculture and Rural Development (NABARD) in case of StCBs and DCCBs.
To provide transaction services, the regulator has set stiff conditions which these cooperative banks will have to fulfil.
A cooperative bank looking to roll out online transactions must have a minimum capital adequacy ratio of 10%, with a networth of at least Rs.50 crore on 31 March of the preceding financial year. It must also have a gross non-performing asset (NPA) ratio of less than 7% and a net NPA ratio of not more than 3%.
The cooperative bank should have made a net profit in the preceding financial year and, overall, should have made a net profit in at least three out of the preceding four financial years, RBI said. Defaults on maintenance of cash reserve ratio (CRR) and statutory liquidity ratio (SLR) would not be allowed.
The bank must have a track record of regulatory compliance, with no monetary penalty imposed on it for violation of RBI directives/guidelines during the two financial years preceding the year in which the application for transaction-based Internet services is made, RBI said.
“The bank will report to the concerned regional office of RBI (and also NABARD in case of StCBs /DCCBs) every breach or failure of security systems and procedures and the latter, at its discretion, may decide to commission a special audit/inspection of such bank,” the notification said.