Banks can now open branches in Tier 2 cities without RBI nod

MUMBAI: The Reserve Bank relaxed branch authorisation policy, allowing banks to open administrative office or service branch in cities with population of over 50,000 but less than 1 lakh without its approval.

"Now that general permission to banks has been extended for opening of branches in Tier 2 centres, domestic scheduled commercial banks (other than RRBs) will be allowed to open administrative offices and central processing centres (CPCs) or service branches in Tier 2 centre (with population 50,000 to 99,999 as per Census 2001)," the RBI said in a notification.

Thus, a bank can open such offices in the Tier II cities without permission from the central bank.

The decision was taken as it was observed that branch expansion in Tier 2 centres has not taken place at the desired pace, it said.

As per the existing regulation, such relaxation is already available to banks in case they want to expand their presence in Tier 3-6 cities.

Source: EconomicTimes