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Section 23 of the Banking Regulation Act, 1949 – Relaxations


 Notice Date : 01 December 2009

Section 23 of the Banking Regulation Act, 1949 – Relaxations in Branch Authorisation Policy

RBI/2009-10/243
DBOD.No.BL.BC. 65 /22.01.001/2009-10

December 1, 2009

All Scheduled Commercial Banks
(excluding RRBs)

Dear Sir

Section 23 of the Banking Regulation Act, 1949 –
Relaxations in Branch Authorisation Policy

A reference is invited to paragraph 152 of the Second Quarter Review of Monetary Policy for the Year 2009-10 (extracts enclosed – Annex I) regarding the proposals to liberalise the extant Branch Authorization Policy for domestic scheduled commercial banks (other than RRBs) based on the recommendations of the Working Group constituted by RBI to review the extant Branch Authorisation Policy.

2. Accordingly, Reserve Bank of India hereby permits domestic scheduled commercial banks (other than RRBs) to open branches in Tier 3 to Tier 6 centres (with population upto 49,999 as per Census 2001 – details of classification of centres tier-wise furnished in Annex II) without having the need to take permission from Reserve Bank of India in each case, subject to reporting.

3. Reserve Bank of India also permits domestic scheduled commercial banks (other than RRBs) to open branches in rural, semi-urban and urban centres in North Eastern States and Sikkim without having the need to take permission from Reserve Bank of India in each case, subject to reporting.

4.  Opening of branches by domestic scheduled commercial banks (other than RRBs) in Tier 1 and Tier 2 centres (centres with population of 50,000 and above as per 2001 Census) will continue to require prior permission of the Reserve Bank of India, except in the case of North Eastern States and Sikkim where the general permission would cover semi-urban and urban centres also.  The number of branches which would be authorized by the Reserve Bank of India based on such applications would depend, inter alia, upon various aspects, including a requirement that banks may plan their annual branch expansion in such a manner, that at least one-third of total number of branches opened in a financial year in Tier 3 to Tier 6 centres  are in underbanked districts of underbanked States (as per Annex III), as also upon a critical assessment of the bank’s performance in financial inclusion, priority sector lending, customer service etc.

5. Banks are also free to convert their general banking branches into Specialised branches subject to the condition that the bank should continue to serve the existing customers of the general banking branches, which are being converted into specialized branches.

6. The general permissions referred to in paragraphs 2, 3 and 5 above would be subject to regulatory/supervisory comfort in respect of the bank concerned and RBI would have the option to withhold the general permissions now being granted, on a case-to-case basis, taking into account all relevant factors.

7. Details of branches opened by banks under general / specific permission and general banking branches converted to specialized branches may be reported to RBI in terms of the existing reporting system as envisaged in paragraph 19 of the Master Circular on Branch Authorisation dated July 1, 2009.

8. As regards foreign banks, the existing Branch Authorisation Policy as contained in the Master Circular on Branch Authorisation dated July 1, 2009 would continue to be applicable until review of the roadmap for foreign banks.

9. This circular is issued in partial modification of the instructions contained in the Master Circular on Branch Authorisation (Circular DBOD.No.BL.BC.20/22.01.001/2009-10 dated July 1, 2009).


Yours faithfully

(P.Vijaya Bhaskar)
Chief General Manager-in-charge

Encl: as stated above


Annex I

Extracts from the Second Quarter Review of Monetary Policy 2009-10

Relaxations in Branch Authorisation Policy

152. As announced in the Annual Policy Statement of April 2009, a Working Group (Chairman: Shri P. Vijaya Bhaskar) was constituted to review the extant branch authorisation policy with a view to providing greater flexibility  to banks for opening branches to enhance banking penetration and promote financial inclusion. The Group has since submitted its Report. Taking into consideration the Group’s recommendations, it is proposed to liberalise the extant Branch Authorisation Policy for domestic scheduled commercial banks (other than RRBs) as under:

•   Domestic scheduled commercial banks (other than RRBs) will now be 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.

•   Opening of branches by domestic scheduled commercial banks (other than RRBs) in Tier 1 and Tier 2 centres (with population over 50,000) will continue to require prior authorisation.

•   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 Reserve Bank. This would be one of the criteria in the Reserve Bank’s consideration of proposals by domestic scheduled commercial banks (other than RRBs) to open branches in Tier 1 and Tier 2 centres.  In considering such proposals, the Reserve Bank would, in addition, take into account banks’ performance in financial inclusion, priority sector lending and level of customer service, among others.


Annex II

Details of tier-wise classification of centres based on population

(i) Classification of centres(tier-wise) 

Population(as per 2001 Census)

Tier 1 -

1,00,000 and above

Tier 2-

50,000 to 99,999

Tier 3-

20,000 to 49,999

Tier 4-

10,000 to 19,999

Tier 5-

5,000 to   9,999

Tier 6-

Less than 5000

(ii) Population-group wise classification of centres

Rural Centre

Population upto 9,999

Semi-urban centre

from 10,000 to 99,999

Urban centre    

  from 1,00,000 to 9,99,999

Metropolitan centre

10,00,000 and above


Annex III

List of Underbanked Districts in Underbanked States (based on 2001 Population census)

ARUNACHAL PRADESH

BIHAR

1.

CHUNGLANG

8.

DARBHANGA

2.

DIBANG VALLEY

9.

GAYA

3.

EAST KAMENG

10.

GOPALGANJ

4.

LOHIT

11.

JAMUI

5.

LOWER SUBANSIRI

12.

JEHANABAD

6.

TIRAP

13.

KAIMUR

7.

UPPER SIANG

14.

KATIHAR

8.

UPPER SUBANSIRI

15.

KHAGARIA

 

ASSAM

16.

KISHANGANJ

1.

BARPETA

17.

LAKHISARAI

2.

BONGAIGAON

18.

MADHEPURA

3.

CACHAR

19.

MADHUBANI

4.

DARRANG

20.

MUNGER

5.

DHEMAJI

21.

MUZAFFARPUR

6.

DHUBRI

22.

NALANDA

7.

DIBRUGARH

23.

NAWADA

8.

GOALPARA

24.

PASCHIMI CHAMPARAN

9.

GOLAGHAT

25.

PURBI CHAMPARAN

10.

HAILAKANDI

26.

PURNIA

11.

JORHAT

27.

ROHTAS

12.

KARBI ANGLONG

28.

SAHARSA

13.

KARIMGANJ

29.

SAMASTIPUR

14.

KAKROJHAR

30.

SARAN

15.

LAKHIMPUR

31.

SHEIKHPURA

16.

MORIGAON

32.

SHEOHAR

17.

NAGAON

33.

SITAMARHI

18.

NALBARI

34.

SIWAN

19.

SIBSAGAR

35.

SUPAUL

20.

SONITPUR

36.

VAISHALI

21.

TINSUKIA

 

CHHATTISGARH

 

BIHAR

1.

BASTAR

1.

ARARIA

2.

BILASPUR

2.

AURANGABAD

3.

DANTEWADA

3.

BANKA

4.

DHAMTARI

4.

BEGUSARAI

5.

DURG

5.

BHAGALPUR

6.

JANJGIR-CHAMPA

6.

BHOJPUR

7.

JASHPUR

7.

BUXAR

8.

KANKER

 

 

CHHATISGARH

 

MADHYA PRADESH

9.

KAWARDHA

13.

GUNA

10.

KORBA

14.

HARDA

11.

KORIA

15.

HOSHANGABAD

12.

MAHASAMUND

16.

JHABUA

13.

RAIGARH

17.

KATNI

14.

RAIPUR

18.

MANDLA

15.

RAJNANDGAON

19.

MANDSAUR

16.

SURGUJA

20.

MORENA

DADRA & NAGAR HAVELI

21.

NARSIMHAPUR

1.

DADRA & NAGAR HAVELI

22.

NEEMUCH

 

JHARKHAND

23.

PANNA

1.

BOKARO

24.

RAISEN

2.

CHATRA

25.

RAJGARH

3.

DEOGHAR

26.

RATLAM

4.

DHANBAD

27.

REWA

5.

DUMKA

28.

SAGAR

6.

GARHWA

29.

SATNA

7.

GIRIDIH

30.

SEHORE

8.

GODDA

31.

SEONI

9.

GUMLA

32.

SHAHDOL

10.

HAZARIBAG

33.

SHAJAPUR

11.

KODERMA

34.

SHEOPUR

12.

LOHARDAGGA

35.

SHIVPURI

13.

PAKUR

36.

SIDHI

14.

PALAMAU

37.

TIKAMGARH

15.

PASCHIMI SINGHBHUM

38.

UJJAIN

16.

SAHEBGANJ

39.

UMARIA

MADHYA PRADESH

40.

VIDISHA

1.

BALAGHAT

41.

WEST NIMAR

2.

BARWANI

MANIPUR

3.

BETUL

1.

BISHNUPUR

4.

BHIND

2.

CHANDEL

5.

CHHATARPUR

3.

CHURACHANDPUR

6.

CHHINDWARA

4.

IMPHAL EAST

7.

DAMOH

5.

IMPHAL WEST

8.

DATIA

6.

TAMENGLONG

9.

DEWAS

7.

THOUBAL

10.

DHAR

8.

UKHRUL

11.

DINDORI

 

 

12.

EAST NIMAR

 

 

 

MEGHALAYA

RAJASTHAN

1.

EAST GARO HILLS

3.

BARAN                                          

2.

SOUTH GARO HILLS

4.

BARMER

3.

WEST GARO HILLS

5.

BHARATPUR

MIZORAM

6.

BHILWARA

1.

LAWNGTLAI

7.

BUNDI

2.

SAIHA

8.

CHITTAURGARH

NAGALAND

9.

CHURU

1.

DIMAPUR

10.

DAUSA

2.

KOHIMA

11.

DHOLPUR

3.

MOKOKCHUNG

12.

DUNGARPUR

4.

MON

13.

HANUMANGARH

5.

PHEK

14.

JALOR

6.

TUENSANG

15.

JHALAWAR

7.

WOKHA

16.

JHUNJHUNU

8.

ZUNHEBOTO

17.

JODHPUR

ORISSA

18.

KARAULI

1.

ANGUL

19.

NAGAUR

2.

BALANGIR

20.

PALI

3.

BALESHWAR

21.

RAJSAMAND

4.

BARGARH

22.

SAWAI MADHOPUR

5.

BHADRAK

23.

SIKAR

6.

BOUDH

24.

TONK

7.

DHENKANAL

25.

UDAIPUR

8.

GAJAPATI

TRIPURA

9.

GANJAM

1.

DHALAI

10.

JAJPUR

2.

NORTH TRIPURA

11.

KALAHANDI

3.

SOUTH TRIPURA

12.

KANDHAMAL

4.

WEST TRIPURA

13.

KENDRAPARA

UTTAR PRADESH

14.

KEONJHAR

1.

AGRA

15.

KORAPUT

2.

ALIGARH

16.

MALKANGIRI

3.

ALLAHABAD

17.

MAYURBHANJ

4.

AMBEDKAR NAGAR

18.

NABARANGPUR

5.

AURAIYA

19.

NAYAGARH

6.

AZAMGARH

20.

NAWAPARA

7.

BAGHPAT

21.

PURI

8.

BAHRAICH

22.

RAYAGADA

9.

BALLIA

23.

SONEPUR

10.

BALRAMPUR

24.

SUNDARGARH

11.

BANDA

RAJASTHAN

12.

BARA BANKI

1.

ALWAR

13.

BAREILLY

2.

BANSWARA

14.

BASTI

 

UTTAR PRADESH

UTTAR PRADESH

15.

BIJNOR

56.

SANT RAVIDAS NAGAR

16.

BUDAUN

57.

SHAHJAHANPUR

17.

BULANDSHAHR

58.

SHRAVASTI

18.

CHANDAULI

59.

SIDHARTHANAGAR

19.

CHITRAKOOT

60.

SITAPUR

20.

DEORIA

61.

SONBHADRA

21.

ETAH

62.

SULTANPUR

22.

ETAWAH

63.

UNNAO

23.

FAIZABAD

WEST BENGA

24.

FARRUKHABAD

1.

BANKURA

25.

FATEHPUR

2.

BARDDHAMAN

26.

FIROZABAD

3.

BIRBHUM

27.

GHAZIPUR

4.

DAKSHIN DINAJPUR

28.

GONDA

5.

HAORA

29.

GORAKHPUR

6.

HUGLI

30.

HAMIRPUR

7.

JALPAIGURI

31.

HARDOI

8.

KOCH BIHAR

32.

HATHRAS

9.

MALDAH

33.

JALAUN

10.

MEDINIPUR

34.

JAUNPUR

11.

MURSHIDABAD

35.

JHANSI

12.

NADIA

36.

JYOTIBA PHULE NAGAR

13.

NORTH 24 PARGANAS

37.

KANAUJ

14.

PURULIYA

38.

KAUSHAMBI

15.

SOUTH 24 PARGANAS

39.

KHERI

16.

UTTAR DINAJPUR

40.

KUSHI NAGAR

 

 

41.

LALITPUR

 

 

42.

MAHARAJGANJ

 

 

43.

MAHOBA

 

 

44.

MAINPURI

 

 

45.

MATHURA

 

 

46.

MAU

 

 

47.

MIRZAPUR

 

 

48.

MORADABAD

 

 

49.

MUZAFFARNAGAR

 

 

50.

PILIBHIT

 

 

51.

PRATAPGARH

 

 

52.

RAI BARELI

 

 

53.

RAMPUR

 

 

54.

SAHARANPUR

 

 

55.

SANT KABIR NAGAR

 

 

TOTAL NUMBER OF UNDERBANKED DISTRICTS IN UNDERBANKED STATES  :- 292

 

 

shashank
on 02 December 2009
Published in Others
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