RBI relaxes branch-licensing policy for RRBs in tier 2 centres

The Reserve Bank of India (RBI) has decided to allow regional rural banks (RRBs) to open branches in tier 2 centres on par with the policy for tier 3 to 6 centres, in order to enhance the penetration of banking services in tier 2 centres.

Accordingly, RRBs will be allowed to open branches in tier 2 centres (with population of 50,000 to 99,999 as per Census 2001) without the need to take permission from the RBI in each case, subject to reporting, provided they follow the RBI prescriptions of minimum CRR of 9 per cent and net NPAs less than 5 per cent.

They should also have not defaulted on CRR/SLR in the past year and should have posted a net profit for that year. They should also be CBS-compliant.

Those RRBs that do not fulfil these conditions will have to continue to approach RBI / NABARD for branch expansion.

 Opening of branches by RRBs in tier 1 centres (centres with population of 100,000 and above as per Census 2001) will also continue to require RBI's prior permission.

RRBs should, however, submit a report on the details of the branches opened in tier 2 to 6 centres, within a fortnight of the end of the quarter, to the concerned regional office of RBI.