The Reserve Bank of India (RBI) Internal Working Group (IWG) on Rationalisation of Branch Authorisation Policy has proposed easing bank branch norms. It was chaired by Lily Vadera. It has proposed to relax norms that a bank branch has to follow, like a building, number of employees etc to facilitate financial inclusion. Key Recommendations Bank branches including those manned by
business correspondents providing minimum 4 hours of service for 5 days a week, should be allowed to be treated as a full-service branch. Any other fixed point unit of the bank not complying with minimum working period should be considered a ‘part-time banking outlet’ A part-time banking outlet can be opened in any centre. It will be counted in for computing requirement of having 25% branches in rural areas. Redefined the un-banked rural centre (URC) as a rural (tier V and VI) centre that does not have a core banking solution-enabled ‘banking outlet.’ Comment The acceptance of recommendations will significantly help to reduce costs for a bank while for opening branches in un-banked rural centres. It will further help to enhance financial inclusion by taking idea of bank as an outlet that delivers basic banking services. Banks, even without traditional branches, can use technology to offer services in areas that so far had no access.
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