RBI ASKS BANKS TO OPEN 25% NEW BRANCHES IN UNBANKED RURAL AREAS

The Reserve Bank of India advised banks, while preparing their annual branch expansion plan, to allocate at least 25 percent of the total number of branches proposed to be opened during a year in unbanked rural centres.

Unbanked rural centres (Tier 5 and Tier 6 centres) are those that do not have a brick and mortar structure of any commercial bank, the Reserve Bank of India (RBI) said in a statement.

At present, banks are permitted to open branches in Tier 3 to Tier 6 centres (having population up to 49,999 as per census 2001) without prior permission from the RBI.

However, opening branches in Tier 1 and Tier 2 centres (with population 50,000 and above) require prior permission of the RBI except in north eastern states and Sikkim.

The RBI said authorisation for branches in Tier 1 and Tier 2 centres will now factor in whether at least 25 percent of total number of branches to be opened are in unbanked rural areas.

For each branch proposed to be opened in Tier 3 to Tier 6 centres of underbanked districts of underbanked states, authorisation will be given for opening of a branch in Tier 1 or Tier 2 centre, the RBI said.

SOURCE: http://articles.economictimes.indiatimes.com/2011-07-15/news/29777999_1_new-branches-open-branches-tier