RBI relaxes branch authorisation policy

Giving greater operational freedom to banks, the Reserve Bank today allowed lenders to shift, merge or close branches, except in rural areas, at their "discretion".
In line with this rationalisation and in order to allow banks greater operational freedom, RBI said that instructions regarding merger, closure, shifting, part shifting, opening of extension counters and reporting requirements have been reviewed.
"Banks may shift, merge or close all branches except rural branches and sole semi-urban branches at their discretion," it said.
However, shifting, merger, or closure of any rural branch as well as a sole semi urban branch would require approval of the District Consultative Committee (DCC)/ District Level Review Committee (DLRC).

Further, in case of rural or semi urban branches, banks should ensure that the banking needs of the centre continue to be met through either satellite offices/mobile vans or through Business Correspondents.
Thus the centre should not be left unbanked, RBI said.

The central bank also said that customers of the branch should be informed well in time before actual shifting, merger or closure of the office.
Further, banks should ensure that they continue to fulfil the role entrusted to these branches under the government sponsored programmes and DBT Schemes.
It further allowed banks to shifting some activities of a branch in any centre due to space or rent constraints, and may do so without seeking prior approval of RBI.

"However, it may be noted that banking activity, i.E., deposit or loan business cannot be maintained at both places, and the new location for part shifting would have to be within 1 km of the existing location," it said.
They may also spin off certain activities such as Government business into separate branches at their discretion, it added.