What changed
Previously, RRBs had to route branch applications through NABARD with sponsor bank recommendation. Now, Empowered Committees at RBI Regional Offices will deliberate and recommend, and RBI will dispose applications expeditiously. Sponsor bank approval is no longer required for branch openings; shifting/merger still needs sub-group of DCC approval. Foreign exchange business requests as limited authorised dealers for current account transactions also go through the Empowered Committee.
What it means for you
This liberalisation reduces bureaucratic layers for RRBs, speeding up branch expansion and forex business approvals. Banks can now bypass sponsor bank sign-off for new branches, cutting approval time. However, shifting/merger still requires DCC sub-group nod, maintaining some oversight. RRBs gain more operational autonomy.
What you must do
- Submit branch opening/shifting/merger applications to respective NABARD Regional Office with advance copy to RBI Regional Office.
- Ensure Empowered Committee clearance is obtained before proceeding with branch openings or forex business (for current account transactions).
- For shifting/merger, still secure sub-group of DCC approval as before.
- Route foreign exchange business proposals as limited authorised dealers for current account transactions through RBI Regional Office after EC clearance.
Who it affects
All Regional Rural Banks, Sponsor Banks of RRBs, NABARD Regional Offices, RBI Regional Offices
Do we still need sponsor bank approval for opening a new branch?
No, sponsor bank approval is no longer required for branch openings. Only Empowered Committee clearance is needed.
What about shifting or merging an existing branch?
For shifting or merger, you still need approval from the sub-group of DCC, in addition to Empowered Committee clearance.
How do we apply for foreign exchange business as a limited authorised dealer?
Submit the proposal to your concerned RBI Regional Office. The Empowered Committee will clear it before RBI considers the request. Note: This applies only to current account transactions.