What changed
The previous Master Circular from July 1, 2006, has been revised and updated to include all instructions issued up to June 30, 2007. The new circular consolidates these updates into a single document, which is now available on the RBI website. Foreign banks are specifically directed to follow paragraph 19 of this circular.
What it means for you
Banks must adhere to the updated consolidated guidelines for all branch authorisation activities, including opening, shifting, conversion, merger, and closure of branches. The circular reinforces the legal requirement under Section 23 of the Banking Regulation Act, 1949, mandating prior RBI approval for any new place of business or change in location. This ensures uniformity and compliance across all scheduled commercial banks and local area banks.
What you must do
- Review the updated Master Circular thoroughly to understand all revised procedures and policy aspects.
- Ensure all branch opening, shifting, conversion, merger, and closure applications follow the prescribed procedures and validity periods.
- For foreign banks, specifically comply with paragraph 19 of the circular.
- Update internal compliance manuals and train relevant staff on the consolidated guidelines.
- Monitor RBI website for any further updates or clarifications to the circular.
Who it affects
All Scheduled Commercial Banks, Local Area Banks (excluding RRBs), Foreign banks operating in India, Bank compliance and branch operations teams
What is the legal basis for branch authorisation?
Section 23 of the Banking Regulation Act, 1949, requires banks to obtain prior RBI approval before opening a new branch or changing the location of an existing one, unless within the same city, town, or village.
Does this circular apply to foreign banks?
Yes, foreign banks are specifically guided by paragraph 19 of this Master Circular.
Where can I find the full Master Circular?
The circular is available on the RBI website at http://www.rbi.org.in.