Q68) Reserve Bank of India (RBI) on 6 August 2015 notified Section 23 of the Banking Regulation Act, 1949 -Relaxations in Branch Authorisation Policy. Some guidelines that should be followed for Merger/Closure/ Shifting of branches includes:
1) Banks may shift, merge or close any branch in urban or semi-urban areas at their discretion
2) Banks should, however, ensure that customers of the branch, which is being shifted/merged/closed, are informed well in time before actual shifting/merger/closure of the branch, so as to avoid inconvenience to them
3) It may further be ensured that branches are shifted within the same or to a larger population category, i.e. semi urban branches to semi urban or rural centres and rural branches to other rural centres.
4) Thus banks may shift their metropolitan, urban and semi urban branches outside the State, and their rural branches outside the block without prior approval of RBI
Which of the statements given above is/are incorrect?
Q68) Reserve Bank of India (RBI) on 6 August 2015 notified Section 23 of the Banking Regulation Act, 1949 -Relaxations in Branch Authorisation Policy. Some guidelines that should be followed for Merger/Closure/ Shifting of branches includes:
1) Banks may shift, merge or close any branch in urban or semi-urban areas at their discretion
2) Banks should, however, ensure that customers of the branch, which is being shifted/merged/closed, are informed well in time before actual shifting/merger/closure of the branch, so as to avoid inconvenience to them
3) It may further be ensured that branches are shifted within the same or to a larger population category, i.e. semi urban branches to semi urban or rural centres and rural branches to other rural centres.
4) Thus banks may shift their metropolitan, urban and semi urban branches outside the State, and their rural branches outside the block without prior approval of RBI
Which of the statements given above is/are incorrect?
The correct option is C Only 1, 3
Ans:68)(c)Expl. RBI relaxed Branch Authorisation Policy that allows banks to shift, merge or close branches, in urban areas, at their own discretion.
The decision will provide more operational freedom to banks. But the branch should be informed well in time before actual shifting, merger or closure of the office.
Some guidelines that should be followed for Merger/Closure/ Shifting of branches includes
- Banks may shift, merge or close all branches except rural branches and sole semi-urban branches at their discretion.
- Shifting, merger, or closure of any rural branch as well as a sole semi urban branch would require approval of the DCC/DLRC.
- Further, while shifting/merging/closing sole rural or semi urban branches, banks may ensure that the banking needs of the centre continue to be met through either satellite offices/mobile vans or through Business Correspondents. Thus the centre should not be left unbanked.
- Banks should, however, ensure that customers of the branch, which is being shifted/merged/closed, are informed well in time before actual shifting/merger/closure of the branch, so as to avoid inconvenience to them.
- Further, while considering shifting/merger/closure of branches, banks should ensure that they continue to fulfil the role entrusted to these branches under the Government sponsored programmes and DBT Schemes.
- It may further be ensured that branches are shifted/ within the same or to a lesser population category, i.e., semi urban branches to semi urban or rural centres and rural branches to other rural centres.
In all such cases, the license, if any was issued, of the merged/closed/shifted branch may be surrendered to the Regional Office concerned of DBS
- except in respect of branches in Maharashtra and Goa, which should be surrendered to DBR, CO, Mumbai.
- Thus banks may shift their metropolitan, urban and semi urban branches outside the State, and their rural branches outside the block without prior approval of RBI.
Part-shifting of Branches
Banks may require shifting some activities/part shift activities of a branch in any centre due to space/rent constraints, and may do so without seeking prior approval of Reserve Bank of India.
However, it may be noted that banking activity, i.e., deposit or loan business cannot be maintained at both places, and the new location for part shifting would have to be within 1 km of the existing location. They may also spin off certain activities such as Government business into separate branches at their discretion.
Opening of Extension Counters
Presently banks can open Extension Counters in the premises of institutions where they are the principal bankers, or obtain a NOC from the principal banker. With a view to enabling customer choice and operational freedom, the requirement of being the principal banker for opening of EC is not required.
Only 1, 3
Ans:68)(c)Expl. RBI relaxed Branch Authorisation Policy that allows banks to shift, merge or close branches, in urban areas, at their own discretion.
The decision will provide more operational freedom to banks. But the branch should be informed well in time before actual shifting, merger or closure of the office.
Some guidelines that should be followed for Merger/Closure/ Shifting of branches includes
- Banks may shift, merge or close all branches except rural branches and sole semi-urban branches at their discretion.
- Shifting, merger, or closure of any rural branch as well as a sole semi urban branch would require approval of the DCC/DLRC.
- Further, while shifting/merging/closing sole rural or semi urban branches, banks may ensure that the banking needs of the centre continue to be met through either satellite offices/mobile vans or through Business Correspondents. Thus the centre should not be left unbanked.
- Banks should, however, ensure that customers of the branch, which is being shifted/merged/closed, are informed well in time before actual shifting/merger/closure of the branch, so as to avoid inconvenience to them.
- Further, while considering shifting/merger/closure of branches, banks should ensure that they continue to fulfil the role entrusted to these branches under the Government sponsored programmes and DBT Schemes.
- It may further be ensured that branches are shifted/ within the same or to a lesser population category, i.e., semi urban branches to semi urban or rural centres and rural branches to other rural centres.
In all such cases, the license, if any was issued, of the merged/closed/shifted branch may be surrendered to the Regional Office concerned of DBS
- except in respect of branches in Maharashtra and Goa, which should be surrendered to DBR, CO, Mumbai.
- Thus banks may shift their metropolitan, urban and semi urban branches outside the State, and their rural branches outside the block without prior approval of RBI.
Part-shifting of Branches
Banks may require shifting some activities/part shift activities of a branch in any centre due to space/rent constraints, and may do so without seeking prior approval of Reserve Bank of India.
However, it may be noted that banking activity, i.e., deposit or loan business cannot be maintained at both places, and the new location for part shifting would have to be within 1 km of the existing location. They may also spin off certain activities such as Government business into separate branches at their discretion.
Opening of Extension Counters
Presently banks can open Extension Counters in the premises of institutions where they are the principal bankers, or obtain a NOC from the principal banker. With a view to enabling customer choice and operational freedom, the requirement of being the principal banker for opening of EC is not required.
