The RBI has today relaxed the branch authorisation policy for banks planning to expand in Tier 2 centres. Tier 2 centes are those towns with a population of between 50,000 and 99,999 as per Census 2001.
The RBI feels that branch expansion in Tier 2 centres has not taken place at the desired pace. Therefore, to provide enhanced banking services in Tier 2 centres, the RBI proposes to permit domestic scheduled commercial banks (other than regional rural banks (RRBs) to open branches in Tier 2 centres without taking prior permission in each case, subject to reporting.
The opening of branches by banks (other than RRBs) in Tier 1 centres (centres with population of 1,00,000 and above as per Census 2001) will continue to require prior permission of the Reserve Bank. While issuing such authorisation, the RBI will continue to factor in, among others, whether at least 25 per cent of the total number of branches to be opened during a year are proposed to be opened in unbanked rural centres.
Detailed guidelines in this regard will be issued separately.