Reserve Bank of India (RBI) on 6 August 2015 notified Section 23 of the Banking Regulation Act, 1949 -Relaxations in Branch Authorisation Policy. The notification allows banks to shift, merge or close branches, in urban areas, at their own discretion.
The decision will provide more operational freedom to banks. The central bank said that customers of the branch should be informed well in time before actual shifting, merger or closure of the office.
Some guidelines that should be followed for Merger/Closure/ Shifting of branches includes
Thus banks may shift their metropolitan, urban and semi urban branches outside the State, and their rural branches outside the block without prior approval of RBI.
Part-shifting of Branches
Banks may require shifting some activities/part shift activities of a branch in any centre due to space/rent constraints, and may do so without seeking prior approval of Reserve Bank of India.
However, it may be noted that banking activity, i.e., deposit or loan business cannot be maintained at both places, and the new location for part shifting would have to be within 1 km of the existing location. They may also spin off certain activities such as Government business into separate branches at their discretion.
Opening of Extension Counters
Presently banks can open Extension Counters in the premises of institutions where they are the principal bankers, or obtain a NOC from the principal banker. With a view to enabling customer choice and operational freedom, the requirement of being the principal banker for opening of EC is not required.
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What: Relaxed by RBI
When: 6 August 2015