RBI offers sops for banks' expansion in Tier 2 centres as well

The Reserve Bank of India (RBI) has extended the incentive scheme for scheduled commercial banks opening branches in Tier 3 to Tier 6 centres to Tier 2 centres as well.

Accordingly, those banks opening branches in Tier 2 centres have been permitted to open an equal number of branches in Tier 1 centres as well, without taking prior RBI approval.

Scheduled commercial banks in the country should, however, allocate at least 25 per cent of the total number of branches proposed to be opened during a year to unbanked rural (Tier 5 and Tier 6) centres, ie, centres which do not have a brick and mortar structure of any scheduled commercial bank for customer-based banking transactions, the Reserve Bank of India (RBI) said in a notification today.

Tier 6 centres are those with population up to 49,999 as per census 2001.

The RBI had already permitted banks to open branches in Tier 3 to Tier 6 centres and in the rural, semi-urban and urban centres in North-Eastern states and Sikkim without taking its prior permission in each case, subject to reporting.

Also, commercial banks have been provided incentives for each branch they open in Tier 3 to Tier 6 centers as there is a felt need for increasing banking facilities in these unbanked centers, RBI said in its notification.