Reserve Bank of India (RBI) has permitted all co-operative banks to offer internet banking to their customers.

Any urban cooperative bank (UCB), state cooperative bank (StCB) and district central cooperative bank (DCCB) that has deployed the core banking solution in full will be permitted to offer non-transactional services to their customers, RBI said in a notification.

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The non-transactional services include balance enquiry, balance viewing, account statement download, as well as request for supply of cheque books, among others.

The start of these services will have to be reported to RBI’s regional office, and to the National Bank for Agriculture and Rural Development (Nabard) for state co-operatives and district central co-operatives.

Any co-operative bank planning to offer online transactions need to have a minimum capital adequacy ratio of 10%, with a net worth of at least INR 500m ($7.6m) on 31 March of the preceding financial year, a gross non-performing asset (NPA) ratio of below 7% and a net NPA ratio of not more than 3%.

The bank should also have made a net profit in the immediate preceding financial year and an overall net profit at least in three out of the preceding four financial years.

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In addition, the bank should have sound internal control system with at least two professional directors on the board, a track record of regulatory compliance, as well as should not be imposed any monetary penalty for violation of RBI guidelines during the two financial years, preceding the year in which the application is made, the notification 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," RBI added.