Mumbai: Banks have been given conditional freedom to open branches in tier-I cities without seeking the Reserve Bank of India’s prior approval in each case.
The RBI, however, linked the measure to the number of branches a bank would open in an un-banked or under-banked centre.
The central bank has clarified that the number of branches opened in tier-I centres cannot exceed the total number of branches opened in centres that do not have any at present.
If a bank is unable to open all the tier-I branches it is eligible to in a particular year, then it can open these branches in the subsequent year, the central bank added.
Earlier Norms
Similarly, banks that are unable to open branches in Tier II to Tier VI centres during the financial year must necessarily rectify the shortfall in the next financial year, the RBI said.
As per the earlier guidelines, all scheduled commercial banks were allowed to open branches in Tier-II to Tier-VI centreswithout taking RBI’s permission in each case.
Based on data given by banks to the RBI in the Basic Statistical Returns, which provides data on a number of key parameters of banks, it is estimated that rural India had only 7 branches per 100,000 adults in 2011. In sharp contrast, most of the developed economies have over 40 branches.
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