What changed
RBI issued a master circular consolidating all existing instructions on branch licensing for Regional Rural Banks (RRBs), including opening, shifting, merger, and conversion of branches. The circular updates the process: RRBs must submit proposals to NABARD with an advance copy to RBI, and Empowered Committees will recommend on applications. No separate sponsor bank approval is needed, but DCC sub-group approval is required for shifting/merger/conversion.
What it means for you
RRBs now have a single reference document for branch licensing, simplifying compliance. The requirement for Board approval before applying reinforces governance. The streamlined process via NABARD and Empowered Committees aims to expedite decisions, but RRBs must ensure no SLR/CRR defaults in the last two years to qualify for new branches.
What you must do
- Ensure Board approval is obtained before submitting any branch opening, shifting, merger, or conversion proposal.
- Submit branch licensing proposals to the respective NABARD Regional Office in Form VI, with an advance copy to RBI's Regional Office.
- Verify that the RRB has not defaulted on SLR/CRR requirements in the last two years before applying for new branches.
- For shifting, merger, or conversion, obtain approval from the sub-group of the District Consultative Committee (DCC).
Who it affects
Regional Rural Banks (RRBs), NABARD Regional Offices, RBI Rural Planning and Credit Department (RPCD)
Do RRBs need separate approval from their sponsor bank for new branches?
No, the master circular clarifies that no separate approval from the sponsor bank is required for opening new branches.
What is the role of the Empowered Committee in branch licensing?
The Empowered Committee, constituted by RBI at its Regional Offices, deliberates on branch applications and makes recommendations to RBI for disposal.
Is DCC approval needed for opening new branches?
No, DCC sub-group approval is not required for opening new branches, but it is required for shifting, merger, or conversion of branches.