What changed
The Master Circular was updated to incorporate all branch licensing instructions issued up to June 30, 2013, replacing the previous version dated July 2, 2012. Key updates include delegation of decision-making powers to RBI Regional Offices for branch openings, shifts, mergers, or conversions, without requiring Empowered Committee reference. The circular also clarifies that RRB Boards must approve branch policies, and sponsor bank approval is no longer needed for new branches.
What it means for you
For RRBs, this circular reinforces the need for Board-driven branch expansion strategies and prior RBI approval for any branch changes. The delegation to Regional Offices should speed up application processing, but selective scrutiny for Tier 1 centres remains. Banks must ensure compliance with Section 23 of the Banking Regulation Act, 1949, and coordinate with NABARD for applications.
What you must do
- Ensure Board approval for all branch opening, shifting, merger, or conversion proposals before applying to RBI.
- Submit applications in Form VI (Rule 12) to the concerned RBI Regional Office via the respective NABARD Regional Office.
- For shifting, merger, or conversion, also obtain approval from the sub-group of the District Consultative Committee.
- Review internal control systems and business plans before proposing new branches, especially in Tier 1 centres.
- Stay updated with the full Master Circular available on the RBI website for detailed annexures and procedures.
Who it affects
All Regional Rural Banks (RRBs), Sponsor banks of RRBs, NABARD (as commenting authority), RBI Regional Offices (processing applications)
Do RRBs need sponsor bank approval for opening new branches?
No, separate approval of the sponsor bank is not required for opening new branches. However, Board approval of the RRB is mandatory.
What is the application process for opening a new branch?
RRBs must submit an application in Form VI (Rule 12) of the Banking Companies Rules, 1949 to the concerned RBI Regional Office through the respective NABARD Regional Office, which provides comments. An advance copy should also be sent to the RBI Regional Office.
Are there any special conditions for opening branches in Tier 1 centres?
Yes, RRBs require prior RBI approval for opening new branches in Tier 1 centres, and applications are considered on a very selective basis based on individual merits.