What changed
The Master Circular was updated to include instructions issued up to June 30, 2012, replacing the previous version from July 1, 2011. It consolidates all existing guidelines on branch licensing for RRBs, including conditions for opening, shifting, merging, and converting branches.
What it means for you
RRBs must continue to follow a structured approval process for branch changes, with Board approval required before applying. New branches in Tier I & II centres face selective scrutiny based on financial health and management quality. The circular streamlines procedures by removing the need for separate sponsor bank or DCC approval for new branches, though DCC approval is still needed for shifts, mergers, or conversions.
What you must do
- Ensure Board approval is obtained before submitting any branch opening, shifting, merger, or conversion proposal.
- Submit proposals to the respective NABARD Regional Office using Form VI, with an advance copy to the concerned RBI Regional Office.
- For new branches in Tier I & II centres, prepare a strong case highlighting financial position, management quality, and internal controls.
- Remember that DCC sub-group approval is not needed for new branches but is required for shifts, mergers, or conversions.
Who it affects
All Regional Rural Banks (RRBs), Boards of Directors of RRBs, NABARD Regional Offices, RBI Regional Offices (RPCD)
Do RRBs need sponsor bank approval for new branches?
No, separate approval from the sponsor bank is not required for opening new branches.
Is DCC approval needed for shifting a branch?
Yes, for shifting, merger, or conversion of branches, approval from the sub-group of the District Consultative Committee (DCC) is required.
What form must RRBs use to apply for branch licensing?
RRBs must use the prescribed application Form VI (Rule 12) of the Banking Companies Rules, 1949, submitted to the respective NABARD Regional Office.