What changed
Earlier, a prudential cap of 300 drawee branches was imposed on Rupee Drawing Arrangements with Exchange Houses. The new circular removes this numerical ceiling, allowing banks to exceed 300 branches if all such branches operate under Core Banking Solution with online monitoring to prevent concealed overdrafts. Banks must obtain board approval before crossing the 300-branch threshold and inform RBI immediately.
What it means for you
Banks can now expand their RDA network beyond the previous 300-branch limit, enabling wider remittance coverage for non-resident Indians. However, this liberalization comes with stricter operational discipline—only CBS-enabled branches with real-time fund tracking qualify. The move signals RBI's confidence in banks' risk management systems while maintaining oversight through mandatory board approval and unchanged tie-up approval requirements.
What you must do
- Obtain board approval before increasing drawee branches beyond 300 under any RDA tie-up.
- Ensure all additional drawee branches are on Core Banking Solution with online funds monitoring to avoid concealed overdrafts.
- Inform RBI immediately after board approval for branch expansion beyond 300.
- Continue to seek prior RBI approval for new tie-ups with Exchange Houses as per existing instructions.
Who it affects
AD Category-I banks handling Rupee Drawing Arrangements, Non-resident Exchange Houses with vostro accounts in India, Compliance and risk management teams of authorized dealer banks
Can we now open unlimited drawee branches under RDA?
No, there is no explicit upper limit, but you must have board approval and ensure all branches beyond 300 are on Core Banking Solution with real-time monitoring. RBI must be informed immediately after board approval.
Does this circular change the requirement for RBI approval of Exchange House tie-ups?
No, the requirement for prior RBI approval for tie-ups with Exchange Houses remains unchanged. Only the cap on drawee branches has been relaxed.