What changed
Earlier, RRBs could open branches in Tier 2 to Tier 6 centres without prior permission, subject to reporting. Now, a new condition requires that at least 25% of all branches planned in a year must be in unbanked rural centres (Tier 5 and Tier 6). An unbanked rural centre is defined as a rural centre lacking any brick-and-mortar structure of a scheduled commercial bank for customer transactions.
What it means for you
RRBs must now prioritise unbanked rural areas in their expansion plans, ensuring a quarter of new branches serve villages without any bank branch. This accelerates financial inclusion and meets government targets for banking access in all villages. Banks need to identify eligible unbanked centres and adjust their branch licensing strategies accordingly.
What you must do
- Ensure at least 25% of your annual branch openings are in unbanked rural (Tier 5 and Tier 6) centres.
- Identify unbanked rural centres in your area of operation that lack any scheduled commercial bank's brick-and-mortar branch.
- Report branch openings in Tier 2 to Tier 6 centres as per existing norms, and seek prior RBI permission for Tier 1 centres.
- Acknowledge receipt of this circular to your respective Regional Office.
Who it affects
All Regional Rural Banks (RRBs), Rural and semi-urban banking operations, Financial inclusion and branch expansion teams
What qualifies as an 'unbanked rural centre' under this circular?
A rural centre in Tier 5 or Tier 6 (population up to 99,999 as per Census 2001) that does not have a brick-and-mortar structure of any scheduled commercial bank for customer-based banking transactions.
Do we still need prior RBI permission for opening branches in Tier 1 centres?
Yes, opening branches in Tier 1 centres (population 1,00,000 and above) continues to require prior permission from the Reserve Bank.
Can we use Business Correspondents instead of brick-and-mortar branches to meet this requirement?
No, the circular specifically mandates brick-and-mortar branches for this 25% allocation. Business Correspondents are mentioned as an additional tool, not a substitute for this requirement.