25% of new bank branches to be in villages: RBI's new policy

The Reserve Bank of India (RBI) on Thursday mandated that 25 per cent of the total number of 'banking outlets' opened during a financial year should be located in unbanked rural centres.

The RBI mandated this in its notification -- "Rationalisation of Branch Authorisation Policy- Revision of Guidelines" -- issued on Thursday.

"Domestic scheduled commercial banks (other than RRBs) are permitted to open, unless otherwise specifically restricted, banking outlets in tier 1 to tier 6 centres without having the need to take permission from RBI in each case," the central bank said in the notification.

"At least 25 per cent of the total number of 'Banking Outlets' opened during a financial year should be opened in unbanked rural centres."

Here are the highlights

—RBI has widened the role of bank boards, making them responsible for complying with the new guidelines

—The RBI removed the restriction on tier-I branches, which was earlier linked to the number of branches opened in the unbanked areas.

—RBI has also changed the definition of what constitutes a branch. As against the earlier definition of considering all the outlets including extension counters and ATMs as a 'branch', the new provisions have changed the nomenclature to calling it as a 'banking outlet'.

—There will be a 'banking outlet' which will be open for minimum four hours a day and five day a week

—There is scope for a part-time banking outlet which will be a fixed point service unit but not comply with working hours requirement.

—The RBI had constituted an internal working group before coming out with the draft guidelines

—The final guidelines issued on Thursday are operational with immediate effect