Reserve Bank of India (Small Finance Banks – Branch Authorisation) Directions, 2025
UR
- Applies toSmall finance banks
- StatusIn force
- ImportanceMUST READ
- IssuedNov 28, 2025
- Amendmentsnone tracked
- Length49 points in 5 sections · 5 min read
The four dates on this rule
- PublishedNov 28, 2025The day RBI put this document out.
- Starts to applyNot statedNot stated separately in this document. Read the rule itself before you assume a start date.
- Time to get readyNot statedCannot be worked out until the day it starts to apply is known.
- 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(1) |
| two years | Outlets opened beyond the requirement carry forward as credit for the next two years, with no extension. RBI Para 10 |
| one year | An authorisation is valid one year; one further year may be sought, after which it lapses. RBI Para 19 |
| 3 years | A new small finance bank gets 3 years from starting business to align its network with these rules. RBI Para 21 |
| 15 percent | Agent prefunding should taper to about 15 percent for deposits and 30 percent for guarantees. RBI Para 73 |
| 30 days | A complainant unanswered for 30 days, or unsatisfied, may approach the RBI Ombudsman. RBI Para 75 |
What it says
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 at once
These directions came into force with immediate effect.
3. Who is covered
These Directions apply to small finance banks.
4. Machines are not outlets
ATMs, e-lobbies, cash machines and mobile branches do not count as banking outlets.
Chapter II. Role of Board of Directors
1. Six policies from the board
The board approves six separate policies. They cover outlets, offices, leases, digital units, agents and doorstep work.
2. The board watches inclusion
The board sets its own inclusion targets and reviews centre wise progress, ideally every quarter.
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, with no extension.
4. Moves go down, not up
Outlets may shift only within the same or a smaller population category, never upward.
5. One year to use it
An authorisation is valid one year; one further year may be sought, after which it lapses.
6. Three years to align
A new small finance bank gets 3 years from starting business to align its network with these rules.
7. Converted branches count too
Outlets converted from former micro finance branches carry the same 25 percent unbanked duty in that year.
8. Premises must be lawful
Outlets may not run from premises unauthorised in law, and landlords' grievances get senior attention.
Do it
9. Customers told in time
Customers of an outlet being merged, closed or shifted must be informed well in time.
10. No customers in back offices
Back offices must have no direct interface with customers.
Background
11. Open without asking
The bank may open outlets in every tier of centre without RBI's case by case permission.
12. The north-east counts double
An outlet in smaller centres of the north-eastern states, Sikkim or notified LWE districts counts as unbanked rural.
13. The committee keeps the map
The state level bankers committee keeps the list of unbanked rural centres on its website.
14. Government business needs leave
Doing government business at an outlet needs the government authority's and RBI's prior approval.
15. Free to move most outlets
The bank may shift, merge or close outlets at its discretion, except rural and sole semi urban ones.
16. Rural closures need consent
Closing, merging or moving a rural or sole semi urban outlet needs the district committee's approval.
17. Permission can be withdrawn
A bank whose general permission is withdrawn needs RBI's prior authorisation, with an annual expansion plan.
18. Offices are not outlets
Head offices, back offices and call centres need no leave from RBI while general permission stands.
19. ATMs anywhere
The bank may set up ATMs at places it chooses, including special economic zones; they are not outlets.
20. No outside advertisements
Third party advertisements on ATM screens are not permitted; the bank may show its own products.
21. Rupees only in zones
ATMs installed in special economic zones deal in Indian rupees only.
22. Digital units welcome
A scheduled bank with digital experience may open digital banking units in any tier without case by case leave.
23. Digital units are outlets
A digital unit counts as an outlet, placed where most of its customers and business come from.
24. A separate front door
Each digital unit is housed distinctly, with its own entry, exit and boundary.
25. Minimum digital services
Each digital unit offers a minimum set of products: accounts, digital kits, loans and self service facilities.
26. No cash over counters
In a digital unit, cash moves only through machines — no physical cash across counters.
Chapter V. 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. Prefunding tapers down
Agent prefunding should taper to about 15 percent for deposits and 30 percent for guarantees.
3. 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
4. Online agents only
Offline correspondents are not allowed; transactions must be online and accounted in real time.
Background
5. Agents extend the bank
The bank may reach customers through agents, so banking spreads wider.
6. Check the agent first
Before taking on an agent, the bank checks their name, money strength, management and skill with cash.
7. Every agent has a base
Every correspondent outlet is attached to a specific base outlet manned by the bank's employee.
8. The bank answers for agents
The bank is fully responsible for the actions of its correspondents and their outlets.
9. The distance rule removed
The old distance limit between agent and base outlet is removed; the board's policy decides oversight instead.
10. Introduced to the village
Bank officials introduce the agent to the public in a meeting with village elders, so nobody is impersonated.
Chapter VI. Doorstep Banking
1. No cash by phone
Cash cannot be sent out on a phone request alone.
2. Doorstep banking allowed
A scheduled bank may offer doorstep services — cash and instrument pickup, cash or draft delivery — with board approval.
3. Same day or next
Cash collected at the doorstep is credited the same day or the next working day.
Chapter VII. Information Reporting
1. Monthly digital reports
Digital unit performance goes to RBI monthly and appears in the annual report.
2. Reported within a week
Opening, closing, merging or shifting any outlet is reported through the CISBI portal within one week.
Chapter VIII. Repeal and other Provisions
1. Old guidance repealed
The earlier branch authorisation guidance for small finance 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 small finance banks
RBI compliance officer and compliance function rules for small finance banks 2026
RBI credit bureau reporting rules for small finance banks 2025
RBI credit card and debit card rules for small finance banks 2025
RBI customer service and fair conduct rules for small finance banks 2025
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