Now Banks can open branches in India without permission of RBI

Reserve Bank of India, RBI has allowed Public Sector and Private Banks to open new Branches without taking the mandatory go-ahead from it.

In a notification yesterday, the Reserve Bank of India said that the general permission to domestic scheduled commercial banks other than Regional Rural Banks, is now allowed to open branches in Tier 1 centres. It said that the objective of this move is to further liberalise and rationalise the branch authorisation policy.

However, it said that the automatic permission is subject to certain conditions including at least 25 per cent of the total number of branches opened during the financial year must be opened in unbanked rural tier 5 and tier 6 centres.

Unbanked centres refer to locations that do not have a brick and mortar structure of any scheduled commercial bank for customer based banking transactions.

“Banks have to ensure that all branches opened during a financial year are in compliance with the norms as stipulated. In case a bank is unable to open all the branches it is eligible for in Tier 1 centres, it may carry-over these branches during subsequent two years,” it said.

Banks, which for some reason are unable to meet their obligations of opening branches in Tier 2 to 6 centres in aggregate, or in unbanked rural centres during the financial year, must necessarily rectify the shortfall in the next financial year, it said.

RBI would have the option to withhold the general permission now being granted to banks which fail to meet the above mentioned criteria along with imposing penal measures on banks which fail to meet the obligations, it added.