Mumbai: The Competition Commission of India (CCI) has asked the Reserve Bank to allow commercial banks operational freedom in areas like branch expansion and opening of new ATMs, in order to unshackle the banking sector.

The one-man Competition Commission comprising Vinod Dhall recently made a presentation to RBI top brass in Mumbai expressing concern over the lack of operational freedom for the banks, which, the commission pointed out, is stifling competition among them.

Under the existing norms, banks are required to seek RBI's permission for every small operational matter, including opening new branches, their location and size.

"The banks are required to seek permission even on matters like whether the ATM would be located on the ground floor or the first floor of a building," CCI said in its presentation.

Several parameters like interest rates on the saving accounts are still regulated by the RBI leaving little scope for competition.

"Forcing" mergers on the banks without determining its impact also go against the spirit of free competition, the CCI pointed out.

To drive home its point, the CCI pointed out the insurance sector, which has seen an impressive growth with around 25 new players in a short span of time. Against this, the CCI said, because of excessive regulation only two new banks could open in the last 10 years.