The Reserve Bank of India will shortly issue a circular completely freeing bank branching for domestic scheduled commercial banks in every part of the country, according to Raghuram Rajan, Governor. No longer will a well-run scheduled domestic commercial bank have to approach the RBI for permission to open a branch, he said in his maiden press conference after taking charge as Governor.
“We will, of course, require banks to fulfil certain inclusion criteria in underserved areas in proportion to their expansion in urban areas, and we will restrain improperly managed banks from expanding until they convince supervisors of their stability.
“But branching will be free for all scheduled domestic commercial banks, except the poorly managed,” he said.
He observed that the people would benefit from more competition between banks, and banks would benefit from more freedom in decision making.