The Reserve Bank of India today allowed greater flexibility for regional rural banks (RRBs) to open new branches, provided they registered constant improvement in operational profits.
The regulator also set September 2011 as the final date for RRBs to upgrade technology and become core banking solution (CBS) compliant.
According to a RBI working group report, which has been forwarded to all sponsored banks, RRB branches opened after September 2009 compulsorily have to be CBS-compliant.
There are 98 RRBs in the country, out of which only three have reported accumulated losses in the last financial year.
“This is an important step taken by the regulator as RRBs for long have been demanding for branch licensing. However, in order to spread banking to the rural areas in the true sense, the state cooperatives should also be allowed to open branches along with the RRBs,” said a senior banker.
Accordingly, RRBs are gearing up for branch expansion. Sponsor banks have already distributed circulars to the unbanked Gram Panchayats (GPs) regarding their willingness to open bank branches.
“There are about 900 unbanked GPs in West Bengal. We will be opening branches as soon as we get the feedback from the interested villages,” said Ambarish Nanda, chairman, Bangiya Gramin Vikash Bank.