Banks can shift, merge urban, semi-urban branches without approval: RBI

However, banks must ensure banking needs continue to be met through satellite offices/mobile vans or through Business Correspondents

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The Reserve Bank of India (RBI) on Thursday said banks can shift, merge or close urban and semi-urban branches without its approval. This is to allow greater operational freedom.

Rural branches outside the block can also be shifted without prior approval of RBI.

In a notification on Thursday, RBI said shifting, merger, or closure of any rural or sole semi urban branch would require approval of the District Consultative Committee/District Level Review Committee. The regulator further said that while doing these activities, banks have to ensure that banking needs continue to be met through either satellite offices/mobile vans or through business correspondents.

However, RBI has asked the lenders to ensure that the customers of the branch are informed well in time before shifting/merger/closure of the branch, so as to avoid inconvenience.

When shifting happens, banks have to ensure that branches are shifted/ within the same or to a lesser population category, that is, semi-urban branches to semi-urban or rural centres and rural branches to other rural centres.

In cases where banks shift some activities/part shift activities of a branch in any centre due to space/rent constraints, then they can do so without seeking prior approval of RBI.

However, deposit or loan business cannot be maintained at both places, and the new location for part shifting would have to be within one km of the existing location. They may also spin off certain activities such as government business into separate branches at their discretion.