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Date: Jul 01, 2009
Master Circular on Branch Authorisation

RBI/2009-10/63
DBOD.No. BL.BC. 20 /22.01.001/2009-10

July 1, 2009
Ashadha 9, 1931(Saka)

All Commercial Banks
(excluding RRBs)

Dear Sir,

Section 23 of Banking Regulation Act, 1949 – Master Circular on Branch Authorisation

Please refer to the Master Circular DBOD.No.BL.BC.21/22.01.001 / 2008-09 dated July 1, 2008 consolidating instructions / guidelines issued to banks on Branch Authorisation  till June 30, 2008.   The Master Circular has been suitably updated by incorporating the instructions issued upto June 30, 2009.  A copy of the updated Master Circular is enclosed. The Master Circular has also been placed on the RBI website (http://www.rbi.org.in).

2. Foreign banks may be guided by paragraph 20 of this Master Circular.



Yours faithfully,

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

Encls. : as above


TABLE OF CONTENTS

Paragraph No

Particulars

A.

PURPOSE

B.

CLASSIFICATION                        

C.

PREVIOUS GUIDELINES CONSOLIDATED                          

D.

SCOPE OF APPLICATION

1.

INTRODUCTION

2

DEFINITION 

3.

BRANCH AUTHORISATION POLICY

4.

PROCEDURE FOR APPLICATION      

5.

VALIDITY OF AUTHORISATIONS 

6.

OPENING OF BRANCHES          

7.

SETTING UP OF OFF SITE ATMs – GENERAL PERMISSION

8.

SUBSTITUTION OF CENTRES                                      

9.

SETTING UP OF CENTRAL PROCESSING CENTRES/BACK OFFICES

10.

CALL CENTRES

11.

BUSINESS FACILITATORS/ BUSINESS CORRESPONDENT MODEL

12.

DOORSTEP BANKING             

13.

SHIFTING OF BRANCHES                  

13.1

General

13.2

Shifting within the centre (city/ town/village)  

13.3

Rural branches

13.3.1

Within the block

13.3.2

Outside the block

13.4

Metropolitan, Urban and Semi Urban branches

13.5

Part Shifting of branches

14.

CONVERSION OF BRANCHES

14.1

Conversion of Specialised Branch

14.2

Conversion of general banking branches to any type of specialized branch

14.3

Upgradation of Extension Counters and Satellite Offices  into full-fledged branches          

14.4

Conversion of Rural Branch into Satellite Office

15

MERGER OF BRANCHES

15.1

General

15.2

Merger of Sole Rural/ Semi Urban Branch

15.3

Merger of Metropolitan, Urban and Semi Urban Branches     

16

CLOSURE OF BRANCHES

16.1

General

16.2

Closure of Rural branches

16.3

Metropolitan, Urban and Semi - Urban branches

17

ACQUISITION OF PREMISES

18.

POPULATION GROUP WISE CLASSIFICATION OF CENTRES  

19.

REPORTING TO RESERVE BANK OF INDIA

20.

FOREIGN BANKS

ANNEX – 1 -FORM VI Form of application for permission to open a new place of Business

ANNEX – 2-  Summary of branches proposed to be opened

ANNEX – 3 (A)- State-wise, population group-wise number of existing branches in  underbanked / other than  underbanked districts

ANNEX – 3 (B)- State-wise, population group-wise number of existing ATMs in  underbanked / other than  underbanked  districts

ANNEX – 3 (C) - State-wise, population group-wise number of existing Extension counters

ANNEX – 3 (D) - Information to be submitted along with Annual Branch Expansion Plan

ANNEX – 4 -    List of Underbanked districts

ANNEX – 5 -   Proposals for shifting of branches

ANNEX – 6 -   Proposals for conversion of General Banking branches into Specialised Branches

ANNEX – 7  -   Proposals for merger of branches

ANNEX – 8  -  Proposals for closure of branches

ANNEX – 9  -  Reporting format for operationalisation of  Off site ATMs by banks

ANNEX – 10 -  Proforma – I & Proforma II

ANNEX – 11-  Conditions subject to which Off-site ATMs can be operationalised by banks

ANNEX – 12-  Facilities which can be provided through  ATMs

APPENDIX  - List of Circulars consolidated in the Master Circular     


Master Circular on Branch Authorisation

A. Purpose

To provide a framework of rules /regulations/procedures to be followed by banks while opening / shifting / closing branches in India in accordance with provisions of Section 23 of the Banking Regulation Act, 1949.

B. Classification

A statutory guideline issued by Reserve Bank of India.

C. Previous guidelines consolidated

The Master Circular updates the instructions contained in the circulars listed in the Appendix.

D. Scope of Application

To all commercial banks (other than RRBs) including Local Area Banks.

Structure

  • Introduction
  • Definition
  • Branch Authorisation Policy
  • Procedure for Application
  • Validity of Authorisation
  • Opening of Branches
  • Setting up of Off Site ATMs – General Permission
  • Substitution of Centres
  • Setting up of Central Processing Centres / Back Offices
  • Call Centres
  • Business Facilitators / Business Correspondent Model
  • Door Step Banking
  • Shifting of Branches
  • Conversion of Branches
  • Merger of Branches
  • Closure of Branches
  • Acquisition of premises
  • Population Group wise classification of centres
  • Reporting to Reserve Bank of India
  • Foreign Banks

Annex – 1 -   FORM VI   (Form of application for permission to open a new place of business)                  
Annex – 2 -   Summary of branches proposed to be opened        
Annex – 3 (A)- State-wise, population-group-wise number of existing branches in nderbanked / other than underbanked districts 
Annex – 3 (B)- State-wise, population-group-wise number of existing ATMs in underbanked / other than underbanked districts   
Annex – 3 (C)- State-wise, population-group-wise number of existing extension counters          
Annex – 3 (D)- Information to be submitted along with Annual Branch Expansion  Plan                    
Annex – 4 -    List of Underbanked districts              
Annex – 5 -    Proposals for shifting of branches from one centre to another centre        
Annex – 6-     Proposals for conversion of General Banking branches into  Specialised branches
Annex – 7 -    Proposals for merger of branches      
Annex – 8 -    Proposals for closure of branches
Annex - 9 -     Reporting   format for operationalisation of Off site ATMs by banks          
Annex–10 -    Proforma – I & Proforma- II
Annex -11      Conditions subject to which Off-site ATMs can be operationalised by  banks
Annex- 12      Facilities which can be provided through ATMs
Appendix -      List of Circulars consolidated in the Master Circular  
           

1. Introduction

The opening of new branches and shifting of existing branches of banks is governed by the provisions of Section 23 of the Banking Regulation Act, 1949. In terms of these provisions, banks cannot, without the prior approval of the Reserve Bank of India (RBI), 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.  Section 23 (2) of the Banking Regulation Act lays down that before granting any permission under this section, the Reserve Bank may require to be satisfied, by an inspection under Section 35 or otherwise, as to the financial condition and history of the banking company, the general character of its management, the adequacy of its capital structure and earning prospects and that public interest will be served by the opening or, as the case may be, change of location of the existing place of business. Therefore, it is mandatory for commercial banks to obtain prior approval of Reserve Bank of India before opening a new branch/ office. Commercial banks (other than RRBs) including Local Area Banks should approach Department of Banking Operations & Development, Central Office in this regard.
The following guidelines relate to the policy for authorisation of branches in India.

2. Definition

For the purpose of branch authorisation policy, a “branch” would include a full-fledged branch, a satellite office, an Extension Counter, an off-site ATM (Automated Teller Machine), administrative office, controlling office, service branch (back office or processing centre) and credit card centre. A call centre will not be treated as a branch.  A call centre is one where only accounts or product information is provided to the customer through tele-banking facility and no banking transaction is undertaken through such centres. Also, no direct interface with clients/ customers is permitted at call centres.

3. Branch Authorisation Policy

(i) With the objective of liberalising and rationalising the branch authorisation policy, a framework for a branch authorisation policy which would be consistent with the medium term corporate strategy of banks and public interest has been put in place. In addition to the requirement relating to the financial condition and history of the banking company, the general character of its management, the adequacy of its capital structure and earning prospects, the branch authorisation policy framework would have the elements enumerated in the following paragraphs.

(ii) As regards the public interest dimensions of the policy framework, the following aspects would be kept in view in processing the authorisation requests:

(a) The RBI will, while considering applications for opening branches give weightage to the nature and scope of banking facilities provided by banks to common persons, particularly in underbanked areas (districts), actual credit flow to the priority sector, pricing of products and overall efforts for promoting financial inclusion, including introduction of appropriate new products and the enhanced use of technology for delivery of banking services.

(b) Such an assessment will include policy on minimum balance requirements and whether depositors have access to minimum banking or “no frills” banking services, commitment to the basic banking activity viz., acceptance of deposits and provision of credit and quality of customer service as, inter alia, evidenced by the number of complaints received and the redressal mechanism in place in the bank for the purpose.

(c) The need to induce enhanced competition in the banking sector at various locations.

(d) Regulatory comfort will also be relevant in this regard.  This would encompass:

  • compliance with not only the letter of the regulations but also whether the bank’s activities are in compliance with the spirit and underlying principles of the regulations.
  • the activities of the banking group and the nature of relationship of the bank  with its subsidiaries, affiliates and associates.
  • quality of corporate governance, proper risk management systems and internal control mechanism.

(iii) As regards the procedural aspects, the existing system of granting authorisations for opening individual branches from time to time has been replaced by a system of giving aggregated approvals, on an annual basis, through a consultative and interactive process. Banks' branch expansion strategies and plans over the medium term would be discussed by the RBI with individual banks. The medium term framework and the specific proposals would cover the opening, closing, shifting, merger and conversion of all categories of branches.

(iv) In terms of the new branch authorisation policy, banks will not be required to approach Regional Offices of Reserve Bank of India for “licence” for opening branches. However, they have to approach RBI,DBOD,CO for authorisation for opening branches. Banks are advised to follow the undermentioned procedure scrupulously, in order to comply with the requirements of Section 23 of Banking Regulation Act, 1949.

4 Procedure for application

4.1 Based on the medium term strategy and considerations outlined in paragraph 3 above, banks should submit on an annual basis detailed proposals for opening new branches at specific centres in the prescribed Form VI in terms of Rule 12 of the Banking Regulation (Companies Rules), 1949, to the Department of Banking Operations and Development, Central Office, Reserve Bank of India, Mumbai for approval. The Proforma of Form VI is enclosed in Annex - 1. The summary of branches proposed to be opened may be submitted as per proforma in bilingual format in Annex 2. Along with this, information sought in Annex 3 (A, B, C & D) should also be furnished. The Form VI is not required to be submitted in respect of Administrative Offices/ Controlling Offices, Credit Card Centres and Back Offices/ Processing Centres.

4.2 Banks are free to submit their annual branch expansion plan any time during the year. It is not linked either to the financial year or calendar year. The annual branch expansion plan should include specific proposals for opening, closing, shifting, merger and conversion of branches where approval of RBI is required in terms of the extant instructions. The annual branch expansion plan will be discussed with the bank, normally, within four weeks from its submission and approvals thereof will be communicated thereafter.

4.3  Notwithstanding the above, banks may approach RBI for any urgent proposals regarding opening of branches, especially in rural/ under banked areas(districts) anytime during the year, in addition to the approvals given under the annual plan, which would be considered on merit.

4.4 The Annual Branch Expansion Plan (ABEP) and any other proposals required to be submitted to RBI in this regard  should have approval of Board of Directors of the Bank or such other authority to which powers have been delegated by the  Board of the bank.

5. Validity of authorisations

5.1 The validity of the authorisation granted would be one year from the date of the issue of consolidated letter of authorisation/ permission.

5.2 Generally, no extension in validity period of the authorisations would be allowed. However, in case the bank is unable to open a particular branch due to genuine reasons during the validity period of one year, they may approach the Regional Office concerned of RBI / DBOD, CO (in respect of branches in Maharashtra & Goa), before expiry of validity period of authorisation for extension of time for  a further period not exceeding one year.

5.3  At centres where a bank fails to open a branch within the validity period of the authorisation i.e. one year (or within the extended time of another year, as the case may be), the permission granted would automatically lapse and if the bank is still interested in opening the branch at that centre, it should include the same in their next Annual Plan.

6.  Opening of branches

6.1 Banks may include all proposals for opening of branches in the annual branch expansion plan. Banks may note that for opening of rural branches approval of District Consultative Committee (DCC) is not required. Further, banks are encouraged to open branches in underbanked districts and rural centres. In order to facilitate banks to identify centres in underbanked districts, a list of such districts is given in Annex 4.  

6.2 In order to ensure even spread of banking in the underbanked districts, it has been decided that proposals submitted by banks for opening of branches in underbanked districts would be considered provided that the location of the proposed branch is not:

(a) Within the municipal limits of State Capital, a Metropolitan Centre or a District Headquarters and

(b) Within 100 kms. from the 4 major Metropolitan Centres (Mumbai, New Delhi, Kolkata and Chennai) and 50 kms. from a State Capital.

However, the above restrictions at (a) and (b) will not be applicable in cases where the location of the proposed branch is in the State of Jammu & Kashmir or any of the 7 North Eastern States viz., Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura.

Notwithstanding the provisions as indicated above, RBI would consider on a case-by-case basis, proposals from banks for opening branches at centres located within underbanked districts which fall within the cateogory of (a) and (b) above, provided the bank is able to satisfy RBI that the location of the proposed branch is really underbanked. 

6.3 Further, new private sector banks are required to ensure that at least 25% of their total branches are in semi-urban and rural centres on an ongoing basis
  
7. Setting up of Off-site ATMs – General Permission

In terms of circular No. DBOD No. BL.BC.137/22.01.001/2008-09 dated June 12, 2009,  Reserve  Bank of India has permitted Scheduled Commercial Banks to install Off-site ATMs at centres/places identified by them, without permission from the Reserve Bank.     This would, however, be subject to any direction which the Reserve Bank may issue, including for closure/shifting of any such Off-site ATMs, wherever so considered necessary by the Reserve Bank.  The banks should report full details of the Off-site ATMs installed by them in terms of the above general permission to the Regional Office concerned of Department of Banking Supervision/ DBOD, CO (in respect of Off-Site ATMs in Maharashtra and Goa) immediately after operationalisation and in any case not later than two weeks, as per the format enclosed  ( Annex -9)  The conditions subject to which Off-site ATMs can be operationalised by banks and the facilities which can be provided by banks through ATMs have been furnished Annex 11 and Annex 12 of this circular.

(ii) Banks are advised to take necessary steps to provide all existing ATMs / future ATMs with ramps so that wheel chair users / persons with disabilities can easily access them and also make arrangements in such a way that the height of the ATM does not create an impediment in its use by a wheelchair user. Banks may also take appropriate steps including providing ramps at the entrance of the bank branches so that the persons with disabilities / wheel chair users can enter the bank branches and conduct business without much difficulty.

(iii) Further, banks should make at least one third of new ATMs installed as talking ATMs with Braille keypads and place them strategically in consultation with other banks to ensure that at least one talking ATM with Braille keypad is generally available in each locality for catering to needs of visually impaired persons. Banks may also bring the locations of such talking ATMs to the notice of their visually impaired customers.

8 . Substitution of centres

8.1 While finalising the centre/ place for opening of a branch, banks should make proper assessment, keeping in view the business potential for opening of the branch thereat. Normally substitution of centres would not be allowed. However, under exceptional circumstances, if banks are unable to open branch at the proposed centre due to genuine problem, banks should approach DBOD, CO alongwith reasons thereof, once in a year. The bank should submit Form VI in respect of the new centre. All such requests will be examined on a case-to-case basis.

8.2 Substitution of centres would be allowed to centres of a similar population group or to a lower population group provided banks undertake to open the branch within the period of validity of authorisation issued. Further, the substitution would not be allowed from a centre in underbanked district to a centre in other than underbanked district.

9. Setting up of Central Processing Centres/ Back offices

Banks may also set up 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. on requests received from other branches and other functions incidental to banking business. These CPCs/ Back Offices should have no direct interface with customers. These CPCs/ Back Offices would be termed as Service Branches and would not be allowed to be converted into General Banking Branches. The proposals for these CPCs/ Back Offices may be included in the annual branch expansion plan. 

10. Call Centres

As no banking transaction is undertaken at a call centre, no permission is required for establishment of a “call centre” as defined in paragraph 2. However, details of opening, closure and shifting of call centres should be reported to RBI as provided in paragraph 18.

11.  Business Facilitator/ Business Correspondent Model

11.1 With the objective of ensuring greater financial inclusion and increasing the outreach of the banking sector, banks have been permitted to use the services of Non-Governmental Organisations / Self Help Group (NGOs/SHGs), Micro Finance Institutions (MFIs) and other Civil Society Organisations (CSOs) as intermediaries in providing financial and banking services through the use of Business Facilitator/ Business Correspondent Model as per the guidelines issued in this regard vide RBI circulars DBOD.No.BL.BC.58/22.01.001/2005-2006 dated January 25, 2006 , DBOD.No.BL.BC.72/22.01.009/2005-2006 dated March 22, 2006 and DBOD.No.BL.BC.74/22.01.009/2007-2008 dated  April 24, 2008, DBOD.No.BL.BC.35/22.01.009/2008-2009 dated August 27, 2008, DBOD.No.BL.BC.36/22.01.009/2008-2009 dated August 27, 2008 and DBOD.No.BL.BC.129/22.01.009/2008-2009 and April 24, 2009.

11.2  There is no objection to banks engaging Common Service Centres established by Service Centre Agencies(SCAs) under the National e-Governance Plan(NeGP) as Business Facilitators, depending on the comfort level of the bank, subject to banks taking adequate precautions and conducting proper due diligence on the entities being engaged as Business Facilitators.

11.3    Further, as the entire objective of permitting banks to use the Business Facilitator/Business Correspondent model is to extend savings and loan facilities to the underprivileged and unbanked population, these models should not be utilized for collecting NRE/NRO/FCNR(B) deposits which are generally of a large value.

11.4    Banks should invariably offer pass book facility to all its savings bank account holders (individuals) including those whose accounts are opened through Business Facilitator/Business Correspondent model. In case the bank offers the facility of sending statement of account and the customer chooses to get statement of account, the banks must issue monthly statement.

12.  Doorstep Banking

Banks are permitted to prepare schemes for offering Doorstep Banking facilities to their customers (including individuals, Corporate, PSUs, Government Department etc.), with the approval of their Boards, in accordance with the guidelines issued by Reserve Bank of India vide circulars No.DBOD.BL.BC.59/22.01.010/2006-2007 dated February 21, 2007 and DBOD.BL.BC.99/22.01.010/2006-2007 dated May 24, 2007. 

13. Shifting of branches

13.1General

(a) Shifting of branches should be part of the medium term corporate strategy of branch expansion. Accordingly, proposals requiring approval of RBI should be included in the annual branch  expansion  plan  as  per  proforma in Annex 5.

(b) Banks should, however, ensure that customers of the branch, which is being shifted, are informed well in time before actual shifting of the branch so as to avoid inconvenience to them.

(c) The details of shifting (i.e. new address, date of shifting etc.) should be reported to the Regional Office concerned of RBI / DBOD CO(in respect of branches in Maharashtra & Goa) immediately after shifting the branch, and in any case not later than two weeks after the  shifting.

(d) No amendment in licence would be required in such cases.  The Regional Office concerned of RBI/DBOD CO(in respect of branches in Maharashtra and Goa) will confirm in writing of having taken on record the new address/location.

13.2  Shifting within the centre (city/ town/ village)

Banks have been given freedom to shift a branch to any location within the centre (city/ town / village) without seeking prior approval from RBI. As such, these cases should not be included in the annual branch expansion plan for our approval. 

13.3   Rural branches

13.3.1 Within the block 

As a matter of policy, shifting of sole rural branch outside the centre / village is not permitted, as such shifting would render the centre unbanked.  However, under exceptional/unforeseen circumstances (natural calamity, adverse law and order conditions etc.,)  if the bank is proposing to shift any sole rural branch outside the centre, DCC approval should be obtained and proposal thereof should be included in the annual plan for our consideration.

Banks are, however, free to shift their rural branches within the block, from centres which are served by more than one branch of a commercial bank, without obtaining prior approval of RBI. While considering shifting of branches, banks should keep in mind the role entrusted to these branches under the Government sponsored programmes. The shifting of branches should also meet the following minimum criteria:

(i)The new centre is of the same or lower population group as the existing centre e.g. a branch at a rural centre can be shifted to another rural centre only; and
(ii) A branch located in underbanked district can be shifted to another centre in an underbanked district only.

13.3.2 Outside the Block

Requests for shifting of branches from centres, which are served by more than one commercial bank branch (excluding Regional Rural Bank branch ) outside the block should be included in the annual branch expansion plan and the same will be considered based on the  following parameters:

(i) Branches being shifted are in existence for five years or more and are incurring losses consecutively for the last three years;

(ii) Branches located at centres prone to certain natural risks such as, floods, landslides or likely to be submerged due to construction of dams or affected by any natural calamities etc;

(iii) Branches functioning in places where law and order problem, insurgency or terrorist activities pose threat to bank personnel and property;

(iv) Branches where the premises occupied by the bank are in a dilapidated condition or burnt/destroyed and no suitable premises are available at the centre etc.

13.4 Metropolitan, Urban and Semi Urban  branches

(a) The banks may at their discretion shift their branches in metropolitan/urban/semi urban centres within the municipal revenue limit of that centre i.e. city/town without prior approval from RBI.

(b) Banks may also shift their branches in metropolitan/urban/semi-urban centres within the same State (except single semi-urban branches as such shifting would render the semi-urban centre unbanked) subject to the minimum criteria stated in para 13.3.1 (i) & (ii) above.

As such, these cases should not be included in the annual branch expansion plan for our approval.

13.5  Part-shifting of branches

Banks will have to approach RBI(DBOD, Central Office, BL Division for domestic banks and DBOD, Central Office, International Banking Division for foreign banks) for approval for shifting of some activities/ part-shifting  of the branch. Part shifting of the branches will be considered by RBI on a case-to-case basis subject to the following norms:

(i) No part shifting would be considered within three years of opening of a branch.
(ii) Part shifting of only one branch per Metropolitan centre/State Capital would be permitted for each bank in a calendar year.
(iii) The new location for part shifting should be within 250 meters of the existing location.
(iv) For a single branch, only one part shifting will be permitted. Once a branch has been allowed part shifting, the new location as well as the existing location will not be eligible for part shifting.
(v) To qualify for part-shifting, the area of the new location should not be more than the area of the existing location.
(vi) The same activity cannot be carried out at both premises.

14. Conversion of branches

14.1 Conversion of Specialised branch

Banks may convert a specialized branch into another category of specialized branch or a general banking branch at their discretion. However, it may be ensured that details thereof are advised to the Regional Office concerned of RBI / DBOD, CO (in respect of branches in Maharashtra & Goa) immediately after the conversion of the branch, and in any case not later than two weeks after conversion.  No amendment to licence/ authorization  would be required. Such cases should not be included in the annual branch expansion plan for our approval. The Regional Office concerned /DBOD,CO(in respect of branches in Maharashtra & Goa) would confirm having taken on record the new nomenclature of the branch.  Such cases should not be included in the annual branch expansion plan for our approval.  

14.2 Conversion of general banking branches to any type of specialized branch

 Proposals for conversion of general banking branches to any type of specialized branch should be included in the annual branch expansion plan for our approval. Such requests would be examined on a case-to-case basis. Details of such requests may be furnished in Annex 6.

14.3   Upgradation of Extension Counters and Satellite Offices  into full – fledged branches

(i) Banks are free to convert their existing Extension Counters (ECs) and Satellite Offices (SO) into full-fledged branches as per their discretion and relocate them within that centre.  However, banks should surrender the licences (if separate licence has been issued) of Extension Counters/ Satellite Office and obtain a permission letter for full-fledged branch before effecting upgradation, from the Regional Office concerned of RBI/ DBOD CO(in respect of ECs in Maharashtra & Goa). Such cases should not be included in the annual branch expansion plan for our approval.

(ii) In cases where banks desire to upgrade their existing Extension Counters and Satellite Offices into full-fledged branches and relocate the same to another centre, such proposals should be submitted to RBI (DBOD CO) for approval.

14. 4 Conversion of Rural branch into Satellite Office

Conversion of a rural branch into satellite office is generally not favoured.  However, in exceptional circumstances, such proposals may be considered. The proposals for conversion of rural branches into satellite offices should be submitted along with the annual branch expansion plan after obtaining the approval from the District Consultative Committee (DCC) for our consideration.

15. Merger of branches

15.1 General

(a) Banks should, ensure that customers of the branch, which is being merged (transferor branch) are informed well in time before actual merging of the branch so as to avoid inconvenience to them.

(b) The details of merger (date of merger etc.) should be reported to the Regional Office concerned of RBI / DBOD CO (in respect of branches in Maharashtra & Goa)  immediately after merger of  the branch, and in  any case not later than two weeks after  merger.

(c) After merger the licence (if separate licence has been issued) ) of the merged branch (transferor branch) should be surrendered to the Regional Office concerned of RBI / DBOD CO (in respect of branches in Maharashtra & Goa) for cancellation. 

15.2  Merger of Sole Rural/ Semi Urban Branch 

As a matter of policy, merger of a sole rural branch / semi-urban branch   is not permitted, as merging the same with a branch outside the centre would render the centre unbanked. However, under exceptional/ unforeseen  circumstances (natural calamity, adverse  law and order condition etc.,),  if  the bank is compelled to merge any sole rural/ semi urban  branch, DCC approval should  be obtained and proposal thereof should be  included in the annual plan  for our consideration. Details of such proposals for rural and semi urban branches are required to be furnished to us for our approval as per proforma in Annex 7.

15.3 Merger of Metropolitan, Urban and Semi Urban branches

Banks may merge one branch with another branch at Metropolitan, Urban and Semi-urban centres (not assigned  any  responsibility under Government sponsored  programme), without seeking prior approval from RBI.  As such  these proposals should not be included in the annual branch expansion plan for our approval.

16. Closure of branches

16.1  General

(a) Banks should, ensure that customers of the branch, which is being closed   are informed well in time before actual closing of the branch so as to avoid inconvenience to them.

(b) The details of closure (i.e.  date of closure  etc.) should be reported to the Regional Office concerned of RBI /  DBOD CO (in respect of branches in Maharashtra & Goa)  immediately after closure of  the branch, and in  any case not later than two weeks after  closure.

(c)  After closure, the licence/authorisation (if a separate licence/authorisation has been issued for a single branch)of the branch should be surrendered to the Regional Office concerned of RBI / DBOD, CO (in respect of branches in Maharashtra & Goa) for cancellation. Where a consolidated authorization has been issued for more than one branch, the bank need not surrender the authorization to the Regional Office concerned of RBI/DBOD.  It would suffice if the bank reports the closure of the particular branch (clearly mentioning the Sl.No. of the Annex to the letter of authorisation issued in respect of the branch)  to enable the Regional Office(DBS) concerned of RBI/DBOD, CO (in respect of branches in Maharashtra and Goa) to note the closure in their records. 

16.2 Closure of Rural branches

As a matter of policy, closure of  even loss making branches at rural centres having a single commercial bank branch (excluding Regional Rural Bank branch)  is not permitted,  as closure would render the centre unbanked. The  proposal for closure of a rural branch at a centre  served by more than one commercial bank branch should be included in the annual branch expansion plan after obtaining approval of District Consultative Committee (DCC).  Details of such proposals are required to be furnished to us for our approval as per proforma in Annex 8.

16.3    Metropolitan, Urban and Semi Urban branches

Banks are permitted to close any branch in metropolitan, urban and semi-urban  (not  assigned responsibility under Government sponsored programme) centres without seeking prior approval from RBI. As such  these proposals should not be included in the annual branch expansion plan for our approval.  

17. Acquisition of premises

(i) Banks have been delegated with all powers relating to hiring of premises, rentals, deposits/advances to premises owners, for acquisition of accommodation on lease/rental basis for their own use (i.e., for Office and Residence of Staff)

(ii) Banks, while acquiring premises for opening of a branch should ensure that the location of the branch complies with the local norms/ laws of Municipal Corporation/ Nagarpalika/ Town area authority / VillagePanchayat or any other competent authority.

(iii) Banks are required to forward a list of their branches/offices that are operating in premises in respect of which a dispute is pending with the landlord to the Regional Director Reserve Bank of India concerned (i.e., RD of the Regional Office of RBI under whose jurisdiction the branch/office in respect of which a dispute is pending is functioning) as per the format enclosed to the circular DBOD.No.BL.BC.32/22.01.03/2008-09 dated August 21, 2008 on a quarterly basis within a period of one month from the close of the respective quarter to which the report relates to.  In respect of branches/offices situated in Maharashtra/Goa, the information will be furnished by banks to the Regional Director, Reserve Bank of India, Mumbai Office, Shahid Bhagat Singh Road, Mumbai – 400 001.

18. Population group-wise Classification of Centres

For the purpose of correct classification of a centre (city/ town/ village) i.e. rural, semi urban, urban or metropolitan, the bank should mention the  correct name of the revenue centre and not just the locality. For this purpose, clarification can also be obtained from the Block Development Officer, Village Panchayat, Tehsildar/ Municipality or Municipal Corporation Office/ Office of the District Collector or District Census Authority.  Further, banks may also ascertain the population group-wise classification of the centre from the Department of Statistics and Information Management (DSIM), Reserve Bank of India, Banking Statistics Division, C-8/9, Bandra-Kurla Complex, Mumbai-400 051, before approaching DBOD CO with their annual branch expansion plan proposals.

19. Reporting to Reserve Bank of India

(a) Reporting to Regional offices/ DBOD, CO

Banks should report details of opening of a new place of business, closure, merger, shifting or conversion of any existing place of business immediately and in any case not later than two weeks after opening/closure/merger/shifting/conversion etc.  to the Regional Office concerned of Reserve Bank of India, except in respect of branches in Maharashtra and Goa, where it should be reported to DBOD, CO, Mumbai.

The banks should also report the details of opening, closure and shifting of call centres to the Regional Office concerned of Reserve Bank of India / DBOD, CO (in respect of call centres in Maharashtra & Goa).

(b) Branch Banking Statistics

Banks should submit within fourteen days of every quarter, information relating to opening, closure, merger, shifting and conversion of branches in Proformae I & II (Annex 10) to Department of Statistics and Information Management (Banking Statistics Division) and the Regional Office concerned of RBI / DBOD, CO. Further, information in respect of Authorised Dealer (AD) branches should be submitted on an on going basis. A ‘Nil' statement must be submitted in case there is nothing to report.

20. Foreign Banks

The branch authorization policy for Indian banks shall also be applicable to foreign banks subject to the following:

  • Foreign banks are required to bring an assigned capital of US$25 million upfront at the time of opening the first branch in India.
  • Existing foreign banks having only one branch would have to comply with the above requirement before their request for opening of second branch is considered.
  • Foreign banks will be required to submit their branch expansion plan on an annual basis.
  • In addition to the parameters laid down for Indian banks the following parameters would also be considered for foreign banks:
    • Foreign bank’s and its group’s track record of compliance and functioning in the global markets would be considered. Reports from home country supervisors will be sought, wherever necessary.
    • Weightage would be given to even distribution of home countries of foreign banks having presence in India.
    • The treatment extended to Indian banks in the home country of the applicant foreign bank would be considered.
    • Due consideration would be given to the bilateral and diplomatic relations between India and the home country.
    • The branch expansion of foreign banks would be considered keeping in view India’s commitments at W.T.O. ATMs would not be included in the number of branches for such computation.

Accordingly, foreign banks should submit their annual branch expansion plan to the Department of Banking Operations and Development, International Banking Division, Central Office, Central Office Building(12th Floor), Shahid Bhagat Singh Marg, Mumbai – 400 001. 


Appendix

List of Circulars consolidated by the Master Circular

No.

Circular No.

Date

Subject

1

DBOD.No.BL.BC.137/22.01.001/2008-09

12.06.2009

Section 23 of Banking Regulation Act, 1949 -Relaxations in Branch Authorisation Policy - Off Site ATMs

2

DBOD.No.BL.BC.129/22.01.009/2008-2009

24.04.2009

Financial Inclusion by Extension of Banking Services –Use of Business Correspondents (BCs)

3

DBOD.No.BL.BC.36/22.01.009/2008-2009

27.08.2008

Financial Inclusion by Extension of Banking Services –Use of Business Correspondents (BCs)

4

DBOD.No.BL.BC.35/22.01.009/2008-2009

27.08.2008

Financial Inclusion by Extension of Banking Services –Use of usiness Correspondents (BCs) – Section 25 companies

5

DBOD.No.BL.BC. 32/22.01.03/2008-09

21.08.2008

Acquisition of accommodation on Lease/Rental basis by Commercial Banks for their branches/offices – Liberalisation of guidelines.

6

DBOD.No.BL.BC.16/22.01.001/2008-09

01.07.2008

Master Circular on Branch Authorisation

7

DBOD.No.BL.BC.74 /22.01.009/ 2007-2008

24.04.2008

Financial Inclusion by Extension of Banking Services – Use of Business Facilitators and Correspondents

8

DBOD.No.BL.BC.16/22.01.001/2007-08

02.07.2007

Master Circular on Branch Authorisation

9

DBOD.No.BL.BC.99 /22.01.010/ 2006-2007

24.05.2007

Doorstep Banking

10

DBOD.No.BL.BC.59/22.01.010/ 2006-2007

21.02.2007

Doorstep Banking

11

DBOD.No.BL.BC.11/22.01.001/2006

01.07.2006

Master Circular on Branch Authorisation

12

DBOD.No.BL.BC.72 /22.01.009/ 2005-2006

22.03.2006

Financial Inclusion by Extension of Banking Services – Use of Business Facilitators and Correspondents

13

DBOD.No.BL.BC.58 /22.01.001/ 2005-2006

25.01.2006

Financial Inclusion by Extension of Banking Services – Use of Business Facilitators and Correspondents

14

DBOD.No.BL.BC.55/22.01.001/ 2005-06.

23.01.2006

Branch Authorisation Policy

15

DBOD.No.BL.BC.35/22.01.001/ 2005-06.

08.09.2005

Liberalization of Branch Authorisation Policy

16

DBOD.No.BL.BC.24/22.01.001/ 2005-06.

03.08.2005

Branch Expansion Strategy of banks

17

DBOD.No.BL.BC.92/22.01.001/ 2004-05.

20.05.2005

Submission of Quarterly Return-Proformae I &II

18

DBOD.No.BL.BC.86/22.01.001/ 2004-05

30.04.2005

Doorstep Banking

19

DBOD.No.BL.BC.82/22.01.001/ 2004-05.

27.04.2005

Shifting of branches/ offices-Rationalization of procedure

20

DBOD.No.BL.BC.39/22.01.001/ 2004-05.

10.09.2004

Opening of central processing centres/ back offices etc.

21

DBOD.No.BL.BC.23/22.01.001/ 2003.

11.09.2003

Providing Depository Services at Extension Counters.

22

DBOD.No.BL.BC.13/22.01.001/ 2003.

18.08.2003

Take over of bank branches.

23

DBOD.No.BL.BC.5/22.01.001/ 2003.

23.07.2003

Third party transfer of funds through ATMs.

24

DBOD.No.IBS.BC.32/23.03.001/ 2002-2003.

17.10.2002

Closure of branches of foreign banks.

25

DBOD.No.BL.BC.74/22.01.001/ 2002.

11.03.2002

Conversion of General Branches into Specialised SSI branches.

26

DBOD.No.BL.BC.62/22.01.001/ 2002.

28.01.2002

Third Party advertisement on ATM Network.

27

DBOD.No.BL.BC.23/22.01.001/ 2000-01.

12.09.2000

Opening of branches/ extension counters/ shifting etc.-Obtention of prior licence.

28

DBOD.No. BL.BC 13 /22.01.03/ 2000-01

04.08.2000

Acquisition of Accommodation on Lease/Rental basis by Commercial Banks for their use

29

DBOD.BC.No.127/12.05.005/ 99-2000.

30.11.1999

Rationalisation of Returns submitted by banks to RBI

30

DBOD.No.BL.BC.105/22.01.03/98

11.11.1998

Acquisition of Accommodation on Lease/Rental basis by Commercial Banks for their use

31

DBOD.No.BL.BC.74/22.01.001/ 98.

29.07.1998

Shifting of Rural branches outside the Block/ Service Area and closure of rural branches.

32

DBOD.No.BL.BC.115/22.06.001/ 97

21.10.1997

Branch Banking Statistics-Submission of Monthly Returns-Revision of Proformae II & III

33

DBOD.No.BL.BC.64/22.01.003/ 97.

05.06.1997

Opening of offices of commercial banks in the National Capital Territory (NCT) of Delhi.

34

DBOD.No.BL.BC.76/22.01.001/ 96.

17.06.1996

Delegation of administrative powers to Regional Offices of DBOD.

35

DBOD.No.BP.BC.60/21.03.051/ 96

16.05.1996

Automated Teller Machines (ATMs)

36

DBOD.No.BP.BC.123/21.03.051/ 95.

16.10.1995

Automated Teller Machines (ATMs)

37

DBOD.No.BP.BC.152/21.03.051/ 94

29.12.1994

Automated Teller Machines (ATMs)

38

DBOD.No.BL.BC.152/22.01.001/ 93

24.08.1993

Opening /Closing of bank branches.

39

DBOD.No.BL.BC.41/22.01.001/ 92.

09.10.1992

Delegation of authority to banks for shifting of offices, spinning-off of business etc.

40

DBOD.No.BL.BC.132/22.01.001/ 92.

20.05.1992

Delegation of authority to banks for shifting of offices, opening of controlling offices, spinning-off of business etc.

41

DBOD.No.BL.BC.24/BL.66/91

06.09.1991

Change in names of offices/branches in Kerala.

42

DBOD.No.BL.BC.132/C.168 (M)-91.

11.06.1991

Opening of Specialised Housing Finance Branches.

43

DBOD.No.BL.BC.81/C168 (64D)-91.

16.02.1991

Opening/closing of bank branches.

44

DBOD.No.BL.BC.68/C168 (64D)-91

16.01.1991

Approach to future branch expansion.

45

DBOD.No.BL.BC.16/C168 (64D)-90

12.09.1990

-do-

46

DBOD.No.BL.BC.72/C168 (64D)-87

14.12.1987

Branch Licensing Policy 1985-90 -Setting up of Satellite/mobile branches.

47

DBOD.No.BL.BC.86/C168-84

21.08.1984

Change in the name of branch necessitated due to change in name of locality/street etc.

48

DBOD.No.BL.BC.147/C168-78

20.10.1978

Change in name of branches of banks

49

DBOD.No.BL.99/C.168-68

19.01.1968

Opening of Mobile Offices

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