Reserve Bank of India tells banks to open micro desks

Hyderabad: The Reserve Bank of India on Thursday issued a master circular to all rural banks, asking them to speed up the process of setting up ultra-small branches, part-time banking outlets and other micro modes of giving permanent services in all under-banked districts as part of the branch licensing system.

The states of AP and Telangana have seven under-banked districts out of 420 such districts in the country — across Anantapur, Kurnool and Srikakulam in AP and Adilabad, Karimnagar Mahabubnagar and Warangal in Telangana.

RBI chief general manager in-charge Mr S.S. Barik issued the circular to all regional rural banks based on recommendations of the working group to ensure availability of services in remote areas.

“Though banks are required to open 25 per cent of branches in rural centres as business prospects in an unbanked centre are not commensurate with the cost of having a full-fledged branch, banks find it unviable to open these branches. Besides, they also face connectivity issues,” the report titled, Rationalisation of Branch Authorisation Policy said.

The opening of new branches and shifting of existing branches of banks is governed by provisions of Section 23 of the Banking Regulation Act. As per the these provisions, banks cannot, without RBI approval, open a new place of business in India or abroad or change, otherwise than within the same, town or village, the location of the existing place of business. RRBs were asked approach the concerned Regional Offices of RBI in this regard.