To promote financial inclusion and to extend the banking network in unbanked areas, general permission has been granted by Reserve Bank of India (RBI) to domestic Scheduled Commercial Banks (SCBs) including Public Sector Banks (excluding Regional Rural Banks) to open branches at any place in the country, without seeking prior approval of RBI in each case, subject to at least 25 percent of the total number of branches opened during a financial year being opened in unbanked rural (Tier 5 and Tier 6) centres (population upto 9999). RBI has also specified that the total number of branches opened in Tier 1 centres (population 100000 and above) during the financial year cannot exceed the total number of branches opened in Tier 2 to Tier 6 centres (population upto 99999) and all centres in the North Eastern States and Sikkim.

For increasing banking penetration and financial inclusion, RBI has advised all State Level Banker’s Committee (SLBC) Convenor banks vide circular No FIDD.CO.LBS.BC. 82/02.01.001/2015-16 dated December 31, 2015 to identify villages with population above 5000 without a bank branch of a scheduled commercial bank in their state. As reported by SLBCs, a total of 6593 villages have been identified and allotted among scheduled commercial banks (including Regional Rural Banks) for opening of branches. State/UT-wise details are given in Annexure. The progress is monitored by RBI. Opening of bank branches is a commercial decision of the banks taken in accordance with the branch opening policy of RBI.

This was stated by Shri Arjun Ram Meghwal, Minister of State in the Ministry of Corporate Affairs in written reply to a question in Lok Sabha today.

Branch opening permission allows banks to open branches subject to rural placement and regional balancing requirements. RBI permits domestic scheduled commercial banks to open branches without prior approval subject to placement conditions: a mandated share of branches must be in unbanked rural centres and openings in the largest urban tier must not exceed openings in other tiers plus specified regions; SLBCs identify and allocate unserved villages for branch opening, RBI monitors progress, and branch openings remain a commercial decision under RBI branch opening policy.