RBI allows banks to merge, shift or close branches in urban areas

August 7, 2015

Reserve Bank of India (RBI) has taken decision to allow banks to merge, shift or close branches in urban areas on their own discretion.
In this regard, RBI has issued a notification that mention detailed provisions of above decisions. This move will give banks greater operational freedom but it won’t be valid for rural areas.
As per RBI notifcation

Merger, shifting or closure of any rural branch as well as a sole semi urban branch will require prior approval of the District Level Review Committee (DLRC) or District Consultative Committee (DCC).
Banks making changes should inform customers of its branch time before actual merger, shifting or closure of the office.
The banking activity, which include deposit or loan business should not be maintained at both places. In case of new location as part shifting should be located within 1 km of the existing location.
The banks should ensure that they continue to fulfill the role entrusted to these branches under the Direct Benefit Transfer Schemes (DBTS) and other government sponsored programmes.
It should be noted that the apex bank has allowed banks to shift their some branch in any centre due rent or space constraints without seeking prior approval of RBI.

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