What changed
RBI issued a master circular consolidating all existing instructions on branch licensing for RRBs, including recent changes. It brings together policies on opening, shifting, merging, and converting branches, extension counters, and ATMs into one document for easier reference.
What it means for you
RRBs now have a single source for branch licensing rules, reducing confusion and ensuring compliance. The circular reinforces the need for Board approval and NABARD routing, while streamlining processes like shifting branches at rural centres without prior RBI approval. Banks must align their branch expansion strategies with these consolidated guidelines.
What you must do
- Review the master circular and update internal branch licensing policies accordingly.
- Ensure all new branch proposals have Board approval and are submitted to NABARD with a copy to RBI.
- For shifting/merger/conversion, obtain approval from the sub-group of District Consultative Committee, in addition to Board approval and NABARD submission.
- Maintain SLR and CRR compliance to remain eligible for new branch openings.
- Train staff on the consolidated procedures to avoid delays in approvals.
Who it affects
Regional Rural Banks (RRBs), Boards of Directors of RRBs, NABARD Regional Offices, RBI Regional Offices (RPCD), Sponsor banks of RRBs
Do RRBs need separate approval from their sponsor bank for new branches?
No, the master circular states that no separate approval from the sponsor bank is required for opening new branches.
What is the role of the Empowered Committee in branch licensing?
The Empowered Committee, constituted by RBI at its Regional Offices, deliberates on branch applications and makes recommendations, which RBI considers for disposal.
Is prior RBI approval needed for shifting a branch within a rural centre?
The circular provides procedural rationalisation for shifting branches at rural centres (para 3.4), but specific conditions are detailed in the master circular; prior approval is required unless exempted under the rationalisation.