In a bid to improve and promote branch expansion by domestic scheduled commercial banks in Tier-II cities, the Reserve Bank of India (RBI) has relaxed branch opening norms in such areas. Accordingly, domestic commercial banks would no longer require any prior approval to open branches in Tier-II cities.
“To provide enhanced banking services in Tier-II centres, it is proposed to permit domestic scheduled commercial banks (other than regional rural banks) to open branches in Tier-II centres without the permission from the central bank in each case, subject to reporting,” RBI said.
The move comes after the regulator had found branch expansion in Tier-II cities had not taken place at the desired pace. Banks do not require the prior approval of the regulator for opening branches in Tier-III to Tier-VI centres and in the rural, semi-urban and urban centres in the northeastern states and Sikkim. However, for opening branches in Tier-I cities, banks would continue to require RBI’s prior approval.