Liberalised branch expansion policy for commercial banks
27 Oct 2009
The RBI has liberalised the extant branch authorisation policy for domestic scheduled commercial banks (other than RRBs).
Under the liberalised policy, domestic scheduled commercial banks (other than RRBs) are free to open branches in Tier 3 to Tier 6 centres as identified in the Census 2001 (with population up to 50,000) under general permission, RBI said.
Opening of branches by domestic scheduled commercial banks (other than RRBs) in Tier 1 and Tier 2 centres (with population over 50,000) will, however, continue to require prior authorisation, it added.
Banks may plan their branch expansion in Tier 3 to Tier 6 centres in such a manner that at least one-third of such branches are in the underbanked districts of underbanked states as will be notified separately by the RBI. This would be one of the criteria under consideration of proposals by domestic scheduled commercial banks (other than RRBs) to open branches in Tier 1 and Tier 2 centres. The RBI would, in addition, take into account banks' performance in financial inclusion, priority sector lending and level of customer service, among others.
Capital adequacy: The enhancements and revisions now stipulated are mostly applicable to advanced approaches of the Basel II framework. Banks in India have implemented standardised/basic approaches contained in the framework.
However, wherever those enhancements and revisions are applicable to standardised/basic approaches, it is proposed to issue detailed guidelines as appropriate for implementation by banks operating in India by end-November 2009, RBI said.