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RBI relaxes branch opening norms for domestic scheduled commercial banks
December 01, 2009:
Reserve Bank of India has now permitted domestic scheduled commercial banks (other than RRBs) to open branches in Tier 3 to Tier 6 centres (with population upto 49,999 as per Census 2001 without having the need to take permission from Reserve Bank of India in each case, subject to reporting.
Reserve Bank of India has also permitted domestic scheduled commercial banks (other than RRBs) to open branches in rural, semi-urban and urban centres in North Eastern States and Sikkim without having the need to take permission from Reserve Bank of India in each case, subject to reporting.
Banks are also free to convert their general banking branches into Specialised branches subject to the condition that the bank should continue to serve the existing customers of the general banking branches, which are being converted into specialized branches.
The general permissions referred above would be subject to regulatory/supervisory comfort in respect of the bank concerned and RBI would have the option to withhold the general permissions now being granted, on a case-to-case basis, taking into account all relevant factors.
However, opening of branches by domestic scheduled commercial banks (other than RRBs) in Tier 1 and Tier 2 centres (centres with population of 50,000 and above as per 2001 Census) will continue to require prior permission of the Reserve Bank of India, except in the case of North Eastern States and Sikkim where the general permission would cover semi-urban and urban centres also. The number of branches which would be authorized by the Reserve Bank of India based on such applications would depend, inter alia, upon various aspects, including a requirement that banks may plan their annual branch expansion in such a manner, that at least one-third of total number of branches opened in a financial year in Tier 3 to Tier 6 centres are in underbanked districts of underbanked States , as also upon a critical assessment of the bank’s performance in financial inclusion, priority sector lending, customer service etc.
As regards foreign banks, the existing Branch Authorisation Policy would continue to be applicable until review of the roadmap for foreign banks.
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