RBI/2009-10/243
DBOD.No.BL.BC. 65 /22.01.001/2009-10
December 1, 2009
All Scheduled Commercial Banks
(excluding RRBs)
Dear Sir
Section 23 of the Banking Regulation Act, 1949 –
Relaxations in Branch Authorisation Policy
A reference is invited to paragraph 152 of the Second Quarter Review of Monetary
Policy for the Year 2009-10 (extracts enclosed – Annex I) regarding the
proposals to liberalise the extant Branch Authorization Policy for domestic
scheduled commercial banks (other than RRBs) based on the recommendations of the
Working Group constituted by RBI to review the extant Branch Authorisation
Policy.
- Accordingly, Reserve Bank of India hereby permits 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 – details of classification of
centres tier-wise furnished in Annex II) without having the need to take
permission from Reserve Bank of India in each case, subject to reporting.
- Reserve Bank of India also permits 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.
- 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 per Annex III), as also upon a critical assessment of the bank’s performance
in financial inclusion, priority sector lending, customer service etc.
- 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 to in paragraphs 2, 3 and 5 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.
- Details of branches opened by banks under general / specific permission and
general banking branches converted to specialized branches may be reported to
RBI in terms of the existing reporting system as envisaged in paragraph 19 of
the Master Circular on Branch Authorisation dated July 1, 2009.
- As regards foreign banks, the existing Branch Authorisation Policy as
contained in the Master Circular on Branch Authorisation dated July 1, 2009
would continue to be applicable until review of the roadmap for foreign banks.
- This circular is issued in partial modification of the instructions contained
in the Master Circular on Branch Authorisation (Circular
DBOD.No.BL.BC.20/22.01.001/2009-10 dated July 1, 2009).
Yours faithfully
(P.Vijaya Bhaskar)
Chief General Manager-in-charge
Encl: as stated above