Banks can open admn office in large cities sans RBI permission

Banks can open admn office in large cities sans RBI permission Mumbai: Banks need not seek permission of the Reserve Bank to open administrative offices in large cities (Tier-I), the central bank said on Tuesday.

"With a view to further increasing operational flexibility of banks, it has been decided to permit domestic scheduled commercial banks (other than RRBs) to open offices exclusively performing administrative and controlling functions in Tier-I centres without the need to obtain prior permission," it said in notification today.

Currently, banks (excluding RRBs) are permitted to open branches in Tier-II to Tier-VI centres (with population less than 100,000) and in rural, semi-urban and urban centres in north-eastern states and Sikkim without seeking its permission.

In its second quarter Monetary Policy 2012-13 in mid-October, RBI had proposed to permit banks to open offices in Tier-I centres as well.

RBI, however, said the permission granted would be subject to regulatory and supervisory comfort and it would have the option to withhold permissions granted on a case-to-case basis.

Though, the apex bank made it clear that opening of branches including Central Processing Centres (CPCs)/ Service Branches by banks in tier I centres (with population of 100,000 and above) will continue to require its prior permission.

In a separate notification, RBI asked the banks to strictly adhere to the policy and guidelines for hiring of premises on lease or rental basis in metropolitan, urban, semi-urban and rural areas.

"It has been observed in certain cases that banks have not complied with the ... Instructions while acquiring premises for their branches causing avoidable inconvenience to customers and possible reputation risk to the banks," it said.

Banks are required to formulate guidelines for acquiring premises on lease or rental basis including delegation of power at various levels.

As well they are required to ensure that the location of the branch complies with the local norms, laws of Municipal Corporation, Nagar Palika, town area authority, village panchayat or any other competent authority.

PTI