RBI panel recommends freedom for rural, semi-urban bank expansion
28 Oct 2009
A group constituted by the Reserve Bank of India (RBI) has recommended that domestic scheduled commercial banks (other than RRBs) may be given freedom to open branches in Tier 3 to Tier 6 centres (centres with population up to 49,999), without the prior permission of the RBI, subject to reporting.
The group has also recommended that domestic scheduled commercial banks (other than RRBs) may be given general permission to open branches in rural, semi-urban and urban centres in the North-Eastern states and Sikkim.
However, the group further recommended that banks would continue to approach the Reserve Bank for prior permission for opening of branches in Tier 1 and Tier 2 centres (centres with population of 50,000 and above as per 2001 census).
"The number of branches, which would be authorised by the RBI based on such applications may depend, inter alia, on various aspects, including a requirement that banks may plan their annual branch expansion in such a manner that at least one-third of the total number of branches opened in a financial year are in underbanked districts and financially excluded districts of underbanked states as also upon a critical assessment of the steps taken by the bank towards achieving the goal of financial inclusion such as the rate of credit growth in rural branches, growth in number of deposit accounts in rural areas and growth in credit accounts for less than Rs25,000 etc," RBI said in a release.
The group has also recommended that the branch authorisation policy in respect of foreign banks may remain unchanged until review of the roadmap for foreign banks.
The group also suggested an appropriate combination of the physical 'brick and mortar' branch model and the branchless models such as offsite ATMs/point of sale terminals, business correspondent model, mobile banking etc as the way forward for ensuring banking penetration and financial inclusion.
