Master Circular on Branch Licensing - RRBs - ஆர்பிஐ - Reserve Bank of India
Master Circular on Branch Licensing - RRBs
RBI/2013-14/98 July 1, 2013 The Chairman Dear Sir, Master Circular on Branch Licensing – Regional Rural Banks (RRBs) Please refer to the Master Circular RPCD.CO.RRB.No.BL.BC.05/03.05.90/2012-13 dated July 2, 2012 consolidating instructions/guidelines issued to banks on Branch Licensing till June 30, 2012. The Master Circular has been suitably updated by incorporating the instructions issued upto June 30, 2013. A copy of the updated Master Circular is enclosed. The Master Circular has also been placed on the RBI website (/en/web/rbi) Yours faithfully, (A.Udgata) Master Circular on Branch Licensing – Regional Rural Banks (RRBs) Index
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. 1.1. General Policy on Branch Licensing
1.2 Conditions for Opening of New Branches with Prior Approval of RBI RRBs should fulfill the following conditions, to become eligible to open new branch/es :
1.3 Relaxation in Branch Licensing Policy RRBs are permitted to open branches in Tier 2 to Tier 6 centers (with population of up to 99,999 as per Census 2001 - details of classification of centers tier-wise furnished in Annex IV) without having the need to take permission from Reserve Bank of India in each case, subject to reporting, provided they fulfill the following conditions as per the latest inspection report :
RRBs eligible to open branches in Tier 2 to Tier 6 centres may do so without prior approval of RBI and approach the Regional Office of RBI for, post-facto automatic, issue of the licence/s. The licence should be displayed in the premise of the branch so opened for information of its customers / public to instill confidence in them that the bank branch is authorized to conduct banking business. The details of the branches thus opened should be reported, in the prescribed format (Annex V), to the concerned Regional Office of RBI (RPCD) and Department of Statistics and Information Management (DSIM) as stated in para 12(iii) of the Master Circular. 2. Opening of Branches / Regional Offices 2.1. Branches at Rural / Semi-Urban / Urban and Metropolitan Centres 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. Note : Population criteria mentioned above will be as per the latest census report figures of the centre (revenue unit and not locality). 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 RRBs shall be required to obtain necessary licence from the concerned Regional Office of RBI (RPCD). RRBs will be allowed to open one Regional Office (RO) for every 50 branches. RRBs having up to 50 branches will be under direct control of the 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 the EC and referred to Central Office, RPCD for consideration. The ROs are not permitted to transact any banking business. However, RRBs are required to obtain licences from the concerned Regional Office of RBI (RPCD) prior to functioning / opening of these offices. RRBs can either shift or close / merge these offices at their discretion without prior approval of RBI, but they are required to ensure that the licence is submitted to the concerned Regional Office of RBI (RPCD) for getting the new address incorporated in the licence at the earliest, but not later than three months from the date of shifting. As regards closure / merger of such offices, the licence has to be surrendered to the concerned Regional Office of RBI (RPCD) for cancellation immediately after the closure / merger of the office under advice to the DSIM of RBI. 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. RRBs are required to obtain necessary licence prior to the opening of an office / branch from the concerned Regional Office of RBI (RPCD). It is observed that some RRBs take unduly long time to approach the Regional Offices for grant of a licence after the authorisation has been issued. It is also observed that some RRBs obtain a licence, but do not open the branch for a considerable period of time and approach the Regional Offices for revalidation of the licences time and again. RRBs should, therefore, approach the Regional Office for issue of a licence only after the infrastructure is ready for opening of the office / branch. Further, RRBs often approach for approval for change in name of a branch due to change in name of the locality or street / road where the branch is located. Since there is no change in location of the branch, banks need not seek approval or approach for amendment to licence in the matter, but intimate the change to the concerned Regional Office of RBI (RPCD) and DSIM, Mumbai. Changes may also take place due to change in name of taluk / district or reorganisation of districts or formation of new States. Under such circumstances, too, RRBs need not forward the relevant licence/s to the Regional Office for amendment and may adopt the changed name on the basis of Government Notification, under advice to the concerned Regional Office of RBI (RPCD) and DSIM, Mumbai. In case any alteration in any name is to be made for avoiding confusion between branches of various banks bearing the same name in the same locality or on account of other justifiable circumstances, such requests should be addressed to the concerned Regional Office of RBI (RPCD) and while forwarding such requests, the relative licences, together with the covering letters, should also be sent. 2.5. Requirement for Conduct of Government Business RRBs are permitted to undertake State Government business as sub-agents of the Sponsor Bank with the prior approval from the concerned State Government and RBI. The Sponsor Bank should submit the proposal to the concerned Regional Office of RBI in accordance with DGBA guidelines issued vide circular DGBA.GAD.No.H.15327/31.01.004/2006-07 dated April 19, 2007, for issue of necessary authorisation. 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. 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 RRBs may shift their branches in urban / metropolitan centres within the same locality / municipal ward without the prior approval of RBI. Regarding shifting of branches outside the locality / municipal ward at Semiurban / Urban / Metropolitan centres, RRBs have to obtain prior approval of the concerned Regional Office of RBI (RPCD). 3.4. 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 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 EC and RRBs should also obtain necessary licence from the concerned Regional Office of RBI (RPCD). 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 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 RRBs, with the approval of their Boards of Directors, can open extension counters at the premises of the institutions of which they are principal bankers after obtaining a licence from the concerned Regional Office of RBI (RPCD) for the purpose. An extension counter can be opened within the premises of big offices / factories, hospitals, military units, educational institutions, residential colonies, shopping complexes where there is a large complement of staff / workers, students, who because of their identical working hours and non-availability of banking facilities at a reasonable distance find it difficult to carry out their banking transactions. Apart from above, RRBs can also set up extension counters after obtaining licence from the concerned Regional Office of RBI (RPCD) at places of worship and market places. The condition of being principal bankers however would not apply in such cases. 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. RRBs should furnish particulars of the proposed extension counters in Parts I and II of the format, given in Annex II, to the concerned Regional Offices of RBI (RPCD), while applying for a licence prior to opening of the extension counter. 6. Upgradation of Extension Counters into Full-fledged Branches 6.1 RRBs should approach the concerned Regional Office of RBI (RPCD) for prior approval for upgrading an extension counter into a full-fledged branch. The proposal is considered if the following conditions are fulfilled :
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 an 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. An intermediate brick and mortar structure (Ultra Small Branch) may be set up between the base branch and Business Correspondent (BC) locations so as to provide support to about 8-10 BC Units at a reasonable distance of 3-4 kilometres. These could be either newly set up or by conversion of the BC outlets. Such Ultra Small Branches should have minimum infrastructure such as a Core Banking Solution (CBS) terminal linked to a pass book printer and a safe for cash retention for operating large customer transactions and would have to be managed full time by bank officers / employees. It is expected that such an arrangement would lead to efficiency in cash management, documentation, redressal of customer grievances and close supervision of BC operations. These could be satellite offices or regular branches as the case may be and licences may be issued, as required, depending on the status, in accordance with the branch licencing policy. 9. Business Facilitator / Business Correspondent Model With the objective of ensuring greater financial inclusion and increasing the outreach of the banking sector, Regional Rural Banks (RRBs) have been permitted to use the services of intermediaries in providing financial and banking services through the use of Business Facilitator / Business Correspondent Model as per the guidelines issued by DBOD in this regard. The list of circulars issued by DBOD is included in the ‘Appendix-List of circulars’. 10. 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.), the RRB may consider merging the two branches with a view to rationalising the spatial spread and reducing establishment / operating costs. 11. 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. 12. Submission of Returns on Branch Banking
(Paragraph 1.3) Details of Tier-wise Classification of Centers Based on Population
(Paragraph 1.3) Name of the Regional Rural Bank : Report of branches opened in Tier 2-6 Centres without prior approval of RBI consequent to relaxations - Status as at the end of quarter
List of Circulars consolidated by the Master Circular
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