Section 23 of the Banking Regulation Act, 1949 - Master Circular on Branch Licensing - Regional Rural Banks (RRBs) - আৰবিআই - Reserve Bank of India
Section 23 of the Banking Regulation Act, 1949 - Master Circular on Branch Licensing - Regional Rural Banks (RRBs)
RBI/2010-11/77 July 1, 2010 The Chairman, Dear Sir, Section 23 of the Banking Regulation Act, 1949 - Reserve Bank of India has been issuing instructions to RRBs regarding opening/shifting/merger of branches/extension counters/offices, etc. from time to time. With a view to consolidating all the current instructions and incorporating certain changes made therein recently, a master circular has been prepared to enable RRBs to peruse the required information at a single source. The master circular consolidates all instructions relating to branch licensing of RRBs issued till date. Please acknowledge receipt to our respective Regional Office. Yours faithfully, (B.P.Vijayendra) Encls: As above
Master Circular on Branch Licensing in respect of Regional Rural Banks (RRBs) 1. Legal Requirements The opening of branches by banks is governed by the provisions of Section 23 of the Banking Regulation Act, 1949. In terms of these provisions, banks cannot open a new place of business in India or abroad or change otherwise than within the same city, town or village, the location of the existing place of business without the prior approval of the Reserve Bank of India (RBI). Thus, it is mandatory for RRBs to seek prior approval/ licence from Rural Planning and Credit Department (RPCD) of RBI before opening of new branches/offices. 1.2 Conditions for opening of new branches RRB should fulfill the following conditions to become eligible for opening of new branch/es. (ii) The RRB should be making operational profits, its net worth should show improvement and its net NPA ratio should not exceed 8 per cent. 2. Opening of branches/ Regional Offices 2.1. Branches at Rural/Semi-Urban/Urban and Metropolitan centres The RRBs can identify rural centres (population up to ten thousand), semi-urban centres (population more than ten thousand but up to one lakh), urban centres (population more than one lakh but up to ten lakh) and metropolitan centres (population more than ten lakh) for opening of branches depending upon the business potential and profitability of the proposed branches. 2.2 Service Branch RRBs may be allowed to set up Service Branches / Central Processing Centres (CPCs) / Back Offices exclusively to attend to back office functions such as data processing, verification and processing of documents, issuance of cheque books, demand drafts etc. and other functions incidental to their banking business. These offices should have no interface with customers and would not be allowed to be converted into General Banking branches. These offices would be treated on par with a branch and the RRBs shall be required to obtain necessary licence from the concerned Regional Office of RBI (RPCD). 2.3. Regional Offices (ROs) RRBs (both amalgamated and stand alone) will be allowed to open one RO for every 50 branches. RRBs having up to 50 branches will be under direct control of Head Office, without any intermediate tier. The cases of RRBs, which require relaxation in the above norm in regard to the number of branches to be covered by one RO due to geographical /other conditions, will be examined by State Level Empowered Committee of the Reserve Bank of India and referred to Central Office, RPCD for consideration. 2.4. Validity of Authorisations and Licences Presently authorisations are issued to RRBs for opening of branches based on the requests received from them (through NABARD) on merits of each case. With a view to ensuring expeditious utilisation of authorisations and actual establishment of the branch, it has been decided to limit the validity of authorisation to a maximum period of two years. 2.5. Requirement for conduct of State/Central Government business If any branch proposes to undertake government business, it would require prior approval from the concerned Government authority and RBI. The RRB should approach the concerned Regional Director, RBI for conducting business of the State Government and the Department of Government & Bank Accounts, RBI, Central Office, Mumbai in regard to the Central Government business. 3. Shifting of branches 3.1 At Rural centres The shifting of branches in rural centres may be effected by RRBs themselves without obtaining the prior approval of RBI, subject to the condition that both the existing and proposed centres are within the same block, and that the relocated branch would be able to cater adequately to the banking needs of the villages served by the existing branch. 3.2. At Semi-Urban centres RRBs may shift their branches at semi-urban centres within the same locality/municipal ward without the prior approval of RBI. It should, however, be ensured that the locality/ward is not rendered unbanked due to the shifting of branch/es. 3.3. At Urban/Metropolitan centres The RRBs may shift their branches in urban/metropolitan centres within the same locality/municipal ward without the prior approval of RBI. 3.4. Procedural rationalization RRBs may shift their branches as indicated above (paras 3.1 to 3.3), but ensure that the licence of the branch is submitted to the concerned Regional Office of RBI (RPCD) for getting the new address incorporated therein at the earliest but not later than three months from the date of the shifting of the branch.` 4. Conversion of full-fledged branches into satellite/mobile offices The RRBs may themselves decide the need for conversion of the existing loss making branches into satellite/mobile offices keeping in view the cost-benefit aspect, the likely inconvenience that may be caused to the existing clientele, the effect of the conversion on the performance in the preparation of district credit plan and priority sector lending. With a view to providing better customer service in rural areas, RRBs may also convert their satellite offices into full-fledged branches after obtaining concurrence from the Empowered Committee on RRBs and RRBs should also obtain necessary licence from the concerned Regional Office of RBI (RPCD). 4.1 Satellite Offices The following guidelines may be followed by the RRBs in respect of satellite offices : Conversion of branches into satellite offices at centres other than rural is not permissible. 4.2. Mobile Offices The scheme of mobile offices envisages the extension of banking facilities through a well protected van with arrangements for two or three officials of the bank sitting in it with books, safe containing cash, etc. The mobile unit would visit the places proposed to be served by it on certain specified days/hours. The mobile offices would be attached to a branch of the RRB. The mobile office/s should not visit the rural places which are served by co-operative banks and places served by regular offices of commercial banks. 5. Opening of Extension Counters The Extension Counter should carry out limited type of banking business, such as,
Further, if the Extension Counter proposes to undertake government business, it would require prior approval from the concerned Government authority and RBI as stipulated under paragraph 2.5 above. 6. Upgradation of Extension Counters into full-fledged branches
6.2 The proposals, wherein the above conditions are not fulfilled entirely but otherwise the concerned Extension Counters have grown so as to be fit for conversion into branches, are considered on merit. 7. Automated Teller Machines (ATMs) 7.1. RRBs need not obtain permission of RBI for installation of ATMs at branches and Extension Counters for which they hold licences issued by RBI. RRBs should, however, report to the concerned Regional Office of the Reserve Bank (RPCD) and DSIM as and when ATM is installed at a branch or an Extension Counter. 7.2 In case any RRB wishes to set up an off-site ATM in its area of operation, it may do so after assessing the cost and benefit. Prior approval of RBI need not be obtained, but on opening of such ATMs, RRBs should immediately inform the respective Regional Office of the Reserve Bank (RPCD) for the purpose of getting a formal authorisation for the place of business. 8. Classification/Re-classification of centres RRBs are advised to ascertain the population group classification of the centres of which they are not sure, from RBI, DSIM, Banking Statistics Division, C-8/9, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051 before approaching RPCD for opening of new branches. Any query with regard to reclassification of centres also may be referred to DSIM by the Head Office of the RRB along with relevant documents such as Gazette Notifications, etc. in support of the change. 9. Merger of loss making branches Where two loss making branches of any RRB are in close proximity to each other (i.e. within a distance of about 5 kms.), RRB may consider merging the two branches with a view to rationalising the spatial spread and reducing establishment/operating costs. 10. Submission of Returns on Branch Banking (ii) In terms of Rule 13 of the Banking Regulations (Companies) Rules, 1949, the RRB is required to submit a list relating to its offices in India in Form VII within a period of one month from the close of every quarter to the office of RBI situated in the state in which its Head Office is located. (iii) Further, RRBs should submit returns in the Proformae given in Annex - III, as advised in Circular RPCD.CO.RRB.BL.BC.10/ 03.05.90A/ 2005-06 (RBI/2005-06/46) dated July 6, 2005, relating to the new offices/branches opened and change in status due to merger, etc. of existing offices/branches effected during the quarter to DSIM (Banking Statistics Division) and the concerned Regional Office of RPCD within 14 days of the month succeeding the quarter to which they relate. While submitting the current quarter Returns, the previous quarter's reference must be quoted in the forwarding letter. 'Nil' Returns must be sent to DSIM and the concerned Regional Office of RPCD in case there is nothing to report on opening/closing/change in status, etc., of any office/branch/NAIO (Not Administratively Independent Offices like Extension Counters, Satellite Offices, ATMs, etc.) during a quarter. List of Circulars consolidated by the Master Circular
Endt. RPCD. CO. No. RRB. BC No./03.05.90-A /20010-11 of date Copy forwarded for information and necessary action, to :
(R.K.Moolchandani) |