Reserve Bank of India (Local Area Banks – Branch Authorisation) Directions, 2025
UR
- Applies toLocal area banks
- StatusIn force
- RBI text changedRBI updated this document on October 01, 2026. BankPulse is re-reading it. BankPulse checked 30 points against RBI's new text on 18 October 2026. 28 stand. 2 are marked below and are being re-read.
- IssuedNov 28, 2025
- Amendmentsnone tracked
- Length30 points in 5 sections · 3 min read
The four dates on this rule
- PublishedNov 28, 2025The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyNov 28, 2025The day this rule starts to apply, as RBI's own text states it.
- Time to get readyNoneIt starts to apply on the day it was published.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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Numbers to remember
| four hours | A banking outlet serves customers at a fixed point for at least four hours a day, five days a week. RBI Para 4(3) |
| 25 percent | At least 25 percent of outlets opened in a year must be in unbanked rural centres. RBI Para 9 |
| two years | Outlets opened beyond the requirement carry forward as credit for the next two years. RBI Para 10 |
| 30 days | A complainant unanswered for 30 days, or unsatisfied, may approach the RBI Ombudsman. RBI Para 53 |
What it says
How firm is each point
Stated by RBI — RBI’s own paragraph says this. We have only made it plainer.
Our reading — BankPulse read RBI’s paragraph and shortened it. The paragraph is the authority, not this line.
Needs judgement — RBI leaves this to the bank to settle, so nobody can give you a fixed number here.
Chapter I. Preliminary
1. What counts as an outlet
A banking outlet serves customers at a fixed point for at least four hours a day, five days a week.
2. In force on issue
These directions took effect from the date of their issue.
3. Who is covered
These Directions apply to local area banks.
4. Machines are not outlets
ATMs, e-lobbies, cash machines and mobile branches do not count as banking outlets.
Chapter III. Banking Outlet Authorisation
Must know
1. A quarter for the unbanked
At least 25 percent of outlets opened in a year must be in unbanked rural centres.
2. Part time counts pro rata
A part time outlet counts in the 25 percent sum in proportion to its hours.
3. Extra credit carried forward
Outlets opened beyond the requirement carry forward as credit for the next two years.
4. Moves go down, not up
Outlets may shift only within the same or a smaller population category, never upward.
Do it
5. Customers told in time
Customers of an outlet being merged, closed or shifted must be informed well in time.
6. No customers in back offices
Back offices must have no direct interface with customers.
Background
7. Ask RBI first, always
Every banking outlet needs RBI's prior authorisation — there is no general permission for local area banks.
8. First one in counts
The first agent outlet of the bank, like the first branch of any bank in an unbanked centre, counts for the norm.
9. Rural closures need consent
Closing, merging or moving a rural or sole semi urban outlet needs the district committee's approval.
10. Mobile branches stay home
Mobile branches may run in all centres, but only within the bank's own area of operation.
11. Offices need approval too
Administrative offices, back offices and call centres all need RBI's prior approval.
12. ATMs anywhere
The bank may set up ATMs at places it chooses; they are not banking outlets.
Chapter IV. Business Facilitator / Business Correspondent Model
Must know
1. Agents charge nothing
An agent may never charge the customer directly. Only the bank may levy open, stated charges.
2. Thirty days, then Ombudsman
A complainant unanswered for 30 days, or unsatisfied, may approach the RBI Ombudsman.
BankPulse example. A complaint reaches the bank on 1 September. If no reply has come by 1 October, that is 30 days. The complainant may then go to the RBI Ombudsman.
Do it
3. Offline allowed, booked daily
Unlike other banks, agents here may do offline transactions — every one must reach the bank's books by day end.
Background
4. Agents extend the bank
The bank may serve customers through business facilitators and correspondents for wider inclusion.
5. Check the agent first
Before taking on an agent, the bank checks their name, money strength, management and skill with cash.
6. The bank answers for agents
The bank is fully responsible for the actions of its correspondents and their outlets.
7. Introduced to the village
Bank officials introduce the agent to the public in a meeting with village elders, so nobody is impersonated.
Chapter V. Doorstep Banking
1. No cash by phone
Cash cannot be sent out on a phone request alone.
2. Agents taught to spot fakes
The bank must teach its agents to detect forged and mutilated notes, to avoid frauds and disputes.
3. Doorstep banking allowed
The bank may offer doorstep services with board approval, managing the risks and cash limits.
4. Same day or next
Cash collected at the doorstep is credited the same day or the next working day.
Chapter VI. Information Reporting
1. Reported within a week
Opening, closing, merging or shifting any outlet is reported through the CISBI portal within one week.
Chapter VII. Repeal and other Provisions
1. Old guidance repealed
The earlier branch authorisation guidance for local area banks stands repealed.
2. Old actions stay governed
Action already taken under the old rules stays governed by them.
The same subject for other kinds of institution
The same subject for other kinds of institution.
Other RBI rules for local area banks
RBI compliance officer and compliance function rules for local area banks 2026
RBI customer service and fair conduct rules for local area banks 2025
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