RBI allows rural banks to open branches in tier 2 cities without approval

The Reserve Bank allowed regional rural banks (RRBs) to open branches in Tier-II cities without taking its permission.

“In order to enhance the penetration of banking services in Tier 2 centres, it has been decided to allow RRBs to open branches without having the need to take permission from Reserve Bank of India in each case,” the apex bank said in a notification.

Accordingly, RRBs will be allowed to open branches in Tier 2 centres (with population of 50,000 to 99,999 as per census 2001) subject to certain conditions, it said. Similar provisions are applicable for opening branches in Tier 3-6 centres.

Regional rural banks with capital adequacy ratio of 9 percent and net non-performing assets of less than 5 percent and net profit in the last financial year would be allowed to open branches in such cities on automatic route basis.

However, RRBs are required to take RBI’s permission for opening of branches in Tier 1 centres (with population of 100,000 and above as per census 2001). In a separate notification, RBI said it has been decided to delegate powers to the regional offices of the Reserve Bank to take decision on the applications of RRBs for opening, shifting, merger or conversion of branches without reference to the concerned Empowered Committees in order to expedite the process.

PTI