As some of the State Cooperative Banks and DCCBs have requested for permission to offer Internet Banking facility, RBI has decided to allow StCBs and DCCBs to extend the facility of internet banking to their customers. So far these were not allowed to provide internet banking facilities to their customers.
Earlier, in 2014 RBI permitted all UCBs complying with certain condition to extend internet banking with ‘view only’ facility, without approval of RBI.
Accordingly, the guidelines issued to the UCBs were reviewed and uniform guidelines for all the cooperative banks are now issued in supersession of previous guidelines issued to UCBs in the matter. The revised guidelines applicable to all the cooperative banks are as follows:
All licensed StCBs, DCCBs and UCBs which have implemented Core Banking Solution (CBS) and migrated to Internet Protocol Version 6 (IPv6) and complying with the guidelines prescribed in Annex-I to this circular 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 security features prescribed in Annex II to this circular, 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.
The cooperative banks have to report commencement of the service to the concerned Regional Office of RBI (and also NABARD in case of StCBs/DCCBs) within one month of operationalization of Internet Banking (View only) facility.
All licensed StCBs, DCCBs and UCBs which have implemented CBS and have also migrated to Internet Protocol Version 6 (IPv6) and fulfilling the following criteria may offer Internet Banking with transactional facility to their customers with prior approval of RBI:
CRAR of not less than 10 per cent.
Networth is Rs.50 crore or more as on March 31 of the immediate preceding financial year.
Gross NPAs less than 7 % and Net NPAs not more than 3%
The bank 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.
It should not have defaulted in maintenance of CRR/SLR during the immediate preceding financial year.
It has sound internal control system with at least two professional directors on the Board.
The bank has a track record of regulatory compliance and no monetary penalty has been imposed on the bank for violation of RBI directives/guidelines during the two financial years, preceding the year in which the application is made.
StCBs, DCCBs and UCBs fulfilling the above-mentioned criteria will be allowed to extend Internet Banking with transactional facility provided they comply with the guidelines prescribed in Annex I and II to this circular. For this purpose, the intending StCB, DCCB and UCB shall submit an application to the concerned Regional Office of RBI (through NABARD in case of StCB/DCCB) with the following documents:
A copy of the Board approved policy on internet banking along with a certificate from an independent auditor (CISA qualified) that the IT and IS policy requirements prescribed in RBI guidelines have been adhered to.
An undertaking to inform RBI about any material change in the services/products offered by them.
The business plan, cost and benefit analysis, operational arrangements like technology adopted, business partners, third party service providers and systems and control procedures that the bank proposes to adopt for managing risks.
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.
StCBs/DCCBs which are already offering Internet Banking (View only) facility to their customers should immediately review their systems in the light of these guidelines and report to the concerned Regional Office of RBI (through NABARD), within one month from the date of issuance of this circular, the type of services offered and the extent of their compliance with these guidelines. Deviations from the guidelines should be reported with an action plan indicating a timeframe for compliance.
StCBs/DCCBs, which are already offering Internet Banking transactional services are advised to comply with the instructions contained in this circular and submit details of their business models, projections of cost/benefits, etc. and obtain post facto approval of the concerned Regional Office of RBI within one month from the date of issuance of this circular. Such applications should be routed through NABARD to the Regional Office of RBI.