RBI issued Uniform Guidelines on Internet Banking for Cooperative Banks

In Current Affairs
November 7, 2015

Reserve Bank on 5 November allowed state co-operative banks (StCBs) and district central co-operative banks (DCCBs) to offer internet banking with “view only” facility. At present, urban cooperative banks (UCBs) that meet certain criteria are permitted to provide internet banking with transactional facility to their customers with prior approval of the RBI. Besides, internet banking with “view only” facility is allowed to be given by all UCBs complying with certain conditions, without RBI’s approval.

Some of the StCBs and DCCBs have requested for permission to offer internet banking facility. It has been decided to allow StCBs and DCCBs to extend the facility of internet banking to their customers.

Revised guidelines for view only facility:-

The new guidelines says that all StCBs, DCCBs and UCBs that have implemented Core Banking Solution (CBS) and migrated to Internet Protocol Version 6 may offer internet banking (view only) facility to their customers, without prior approval of RBI.
In case any service offered under view only facility requires two-factor authentication or One Time Password (OTP), banks may adopt the prescribed security features, as appropriate to such services.
The cooperative banks offering internet banking (View only) facility to their customers should ensure that the facility is strictly for non-transactional services such as balance enquiry, balance viewing, account statement download, request for supply of cheque books, etc. And no online fund-based transactions are allowed, as per the guidelines.

Revised guidelines for internet banking with transactional facility:-

StCBs, DCCBs and UCBs wanting to give internet banking with transactional facility must get RBI approval with the conditions that ,

Capital adequacy ratio is not less than 10 per cent,
Networth is Rs 50 crore of more as of March 31 of the preceding fiscal
Gross non-performing assets (NPAs) are less than 7 per cent
Net NPAs are not more than 3 per cent.

Also, such banks should have made a net profit in the immediate preceding financial year and overall, should have made net profit at least in three out of the preceding four financial years and should not have defaulted in maintenance of CRR/SLR during the immediate preceding financial year.
They should also have a track record of regulatory compliance, with no monetary penalty being imposed on them for violation of RBI guidelines during the two financial years preceding the year in which the application was made.