RBI allows banks to shift, merge or close branches in urban areas

The Reserve Bank of India (RBI) has allowed the banks to shift, merge or close all branches except rural branches and sole semi-urban branches at their own discretion.

The RBI said the banks should, however, ensure that customers of the branch, which is being shifted/merged/closed, are informed well in time before actual shifting/merger/closure of the branch, so as to avoid inconvenience to them. Further, while considering shifting/merger/closure of branches, banks should ensure that they continue to fulfil the role entrusted to these branches under the government sponsored programmes and DBT Schemes.

In a notification issued from Mumbai yesterday, the RBI said that shifting, merger or closure of any rural branch as well as a sole semi urban branch would require approval of the District Consultative Committee or District Level Review Committee.

However, banking activity, that is deposit or loan business should not be maintained at both places, and the new location for part shifting would have to be within 1 km of the existing location.

The banks have also been allowed to shift some activities of a branch in any centre due to space or rent constraints without seeking prior approval of the RBI.