Banks do business through branches. Opening of branches gives bank access to the untapped, unexplored, unexploited and virgin areas. It has direct impact on the performance of a bank. It also helps in enhancing brand image of the bank.
From the angle of availability of banking facility an area can be classified as;
· Banked- Area where there is at least one branch of a bank
· Un-banked- Where there is no branch of any bank
· Overbanked. Where number of bank branches are functioning
Opening of Branches: -
Section 23 of the Banking Regulation Act, 1949, governs Opening and shifting of branches. In terms of the provisions of Section 23, banks cannot, open a branch in India without the prior approval of the Reserve Bank of India (RBI).Permission from RBI is required to open a branch of an Indian bank abroad .
RBI gives aggregated approvals, on an annual basis, through a consultative and interactive process. Banks can submit their annual branch expansion plan any time during the year. It is not linked either to the financial year or calendar year.
Before granting any permission for opening of branch, Reserve Bank may conduct inspection of the bank under sec.23 (2) to ascertain the financial condition of the bank.
In terms of the new branch authorisation policy, banks will not be required to approach Regional Offices of Reserve Bank of India for “licence”.
Classification of Branches: -
Branches can be classified on following two parameters
On the basis of Business
On the basis of area of operations
1-On the basis of Business
From the business point of view, banks’ branches can be classified into following two categories
(a) General banking branches: -
These branches do all type of general banking business viz. accepting deposits, lending remittances, lockers, safe custody etc
(b) Specialised branches: -
These branches do specific business for catering to the banking requirement of specific target group
2-On the basis of area of operations
From loctational / area point of view, the branches are classified on the basis of population. Based on the population of the area of operations of the branch, classification of the branches is done. Which is as under: -
Criteria Population
Rural ---- Less than 10,000 (Ten Thousand)
Semi Urban ---- 10,000 (Ten thousand) to 1,00,000 (One Lac)
Urban ----- 1,00,000 (One Lac) to 10,00,000 (Ten Lac)
Metropolitan --- 10,00,000 (Ten Lac) and above
Opening of branches at --
1. Rural & Semi-urban centres:
Banks are required to include all proposals for opening of branches in the annual branch expansion plan. For opening of rural branches, approval of District Consultative Committee (DCC) is not required, in terms of guidelines contained in the Master Circular No. DBOD.No. BL.BC.11 /22.01.001/2006 July 1, 2006.
2. Urban and Metropolitan Centres:
Depending upon the business potential and profitability, banks can identify urban and metropolitan centres for opening of branches and include all proposals for opening of branches in the annual branch expansion plan.
Opening of Specialised Branches:
Banks are required to include all proposals for opening of specialised branches or their conversion to a general banking branch in the annual branch expansion plan. Banks may convert a specialized branch into another category of specialized branch or a general banking branch at their discretion.
a -Industrial Finance
b- Treasury
c- Overseas
d- Non Resident Indian
e- Small Scale Industries
f-Corporate Banking
g- Savings Bank
h-Personal Banking
i- Service branch
j-Housing Finance-
k-Asset Recovery Management
l-International Business
m-MICR
n-Agriculture Finance
o-Capital Market
Housing Finance branches - These branches deal in financing housing requirement in addition to undertaking other normal banking functions .As per the guidelines banks are required to designate one of their specific branches in each district for the purpose of housing finance.
Industrial/Project Area Branches - Project sites, industrial areas/estates promoted by the State Governments and new markets are expected to require additional bank branches, for financing such projects. Branches opened for this purposes are known as Industrial /Project Area Branches.
Service branches:
The banks can open, without the prior authorisation of Reserve Bank of India, Service branches/Regional Collection Centres for facilitating clearing and allied work.Service branches do not perform normal banking business of accepting deposits and lending.However, they participate in the activities of clearing house on behalf of all the branches of their bank at a particular location.
Opening of Currency Chest - Currency chests are the store house where bank notes and coins are stockede on behalf of Reserve Bank of India.Unless authorized by Reserve Bank of India, banks cannot open Currency Chests.
- Currency chests meet the currency requirement of public
- Exchange Mutilated /soiled/ unfit/ currency notes.
- Exchange facility from one denomination to another
Spinning off Business: -
The banks may resort to spin-off of business such as, government business, small-scale industry business, etc. from an existing branch, and open a new specialised branch.
Opening of Satellite Offices.
Where the banks do not find it viable to open branches in rural areas, they open satellite offices after obtaining approval of concerned District Consultative Committee and Directorate of Institutional Finance of the concerned State Government.
For establishing Satellite Offices banks are required to follow the guidelines mentioned below: -:
a) The Satellite Office is to be established at fixed premises in the surrounding villages and is to be controlled and operated from a base branch located at a Central Village/Block Head Quarters.
b) Each Satellite Office has to function on a few specified days (at least twice) in a week at- specified hours.
c) All types of banking transactions are to be conducted at these offices.
d) The customers of the Satellite Offices are to be permitted to transact business at the base branch on non-operating days of such offices.
e) While separate ledgers/registers/scrolls are to be maintained for each Satellite Office, all the transactions carried out at these offices are be incorporated in the books of account of the base branch.
f) The staff attached to the base branch is to be deputed to the Satellite Offices.
Conversion of Rural branch into Satellite Office:
Conversion of a rural branch into satellite office is generally not favored. However, in exceptional cases Reserve bank permits conversion, which is granted after obtaining the approval from the District Consultative Committee (DCC). After receiving approval for conversion, licence of the branch is to be surrendered to the Regional Office concerned for cancellation.
Mobile Offices: -
Where the banks do not find it economical to open full-fledged branches or Satellite Offices at rural centres, they open Mobile Offices after obtaining necessary licence from the concerned Regional Office of RBI.
Mobile Offices envisages the extension of banking facilities through a well-protected van with arrangements for two or three officials of the bank sitting in it with books, safe containing cash, etc. The mobile unit would visit the proposed places to be served by it on certain specified days/hours. However, the mobile branch offices are not to visit rural places that are served by co-operative banks. The mobile office is attached to a branch of the bank.
Virtual Branch
These are no brick mortar branches. The branches are established through a web site of a bank. With the web site, customers can open new accounts, apply for loans, view account balances and histories, transfer funds, pay bills electronically, view personal information on record at the bank, generate reports based on customer activity, download active statements into personal financial management software, interact with customer service representatives via e-mail, and have access to their account 24 hours a day, 365 days per year.
Shifting of branches
Banks have been given freedom to shift a branch to any location within the centre (city/ town / village) without seeking prior approval from RBI. However, banks should ensure that the new address is communicated to the Regional Office concerned of RBI after the branch starts functioning from the new address/ location. No amendment in licence would be required in such cases.
Shifting of Rural branches
Banks are free to shift their rural branches within the block without obtaining prior approval from RBI. However, banks while shifting rural branches have to keep in mind the role entrusted to these branches under the Government sponsored programmes.
However, a branch at a rural centre can be shifted to another rural centre only; and a branch located in under banked district can be shifted to another centre in an under banked district only.
Shifting of Metropolitan, Urban and Semi Urban branches
The banks may at their discretion shift their branches in metropolitan/ urban/ semi-urban centres within the municipal revenue limit of that centre i.e. city/ town without prior approval from RBI. Banks may also shift their branches within the same State. In case the bank was issued a licence for that branch in terms of the earlier policy, the same may be got amended from the Regional Office concerned before shifting.
Opening of Extension Counters : -
Extension Counters are opened within the premises of big offices/factories, hospitals, military units, educational institutions, etc. where there is a large complement of staff/workers, students, who because of their identical working hours and non-availability of banking facilities at a reasonable distance find it difficult to carry out their banking transactions.
However, extension counters cannot be opened at residential colonies, shopping complexes, market places and places of worship, etc.
After obtaining licence from Reserve Bank of India banks open Extension counters at the premises of the institutions of which they are the principal bankers.
The Extension Counters carry out limited type of banking business, such as,
· Acceptance of Deposit and withdrawals.
· Issuing and encashment of drafts and mail transfers,
· Issue and encashment of travellers cheques,
· Sale of gift cheques,
· Collection of bills,
· Advances against fixed deposits of their customers (within the sanctioning power of the concerned officials at the Extension Counter),
· Facility of safe deposit locker (provided adequate security arrangements are made).
Prior approval of concerned Government authority as also of RBI, Central Office, Department of Government & Bank Accounts is required for undertaking government business by Extension counters.
Restrictions in transacting business: -
Without the prior permission from concerned competent authorities bank branches cannot handle certain types of business some of these are
· Handling of Government Business i.e. Acceptance of Direct
taxes/Central Excise, customs etc.
· Disbursement of pension
· Departmentalisation of Central Government Accounts
· Sales-tax (Central & State),
· Collection of Professional Tax
· Public Provident Fund
Up gradation of Extension Counters into full – fledged branches: -
Banks are free to convert their existing Extension Counters into full-fledged branches as per their discretion and relocate them within that centre. Banks have to surrender the licenses of Extension Counters and obtain a permission letter for full-fledged branch in lieu of Extension Counter, from the Regional Office concerned.
Automated Teller Machines (ATMS): -
ATMs can be installed either on site or off site. When ATM is installed in the branch premises it is known as On Site ATM and when it is installed at a place other than the branch it is known as Off Site ATM.
The banks need not obtain permission of the Reserve Bank of India for installation of ATMs at branches and at Extension Counters (ECs) for which they hold licences issued by the Reserve Bank of India
In addition to the installation of ATMs at branches and Extension Counters, banks can also install off-site ATMs at other places identified by them without prior approval of RBI, but they should obtain a licence from the concerned Regional Office of DBOD before operational sing the ATM
The following functions may be provided at non-branch / "stand-alone" ATMs:
· Deposits/ Withdrawal
· Personal Identification Number (PIN) changes
· Requisition for cheque books
· Statement of accounts
· Balance enquiry and
· Inter account transfer - restricted to accounts of the same
customer at same centre or different centres.
· Telephone communications between the "stand-alone" ATMs with
branch ATMs and Shared Payment Network System (SPNS) can be
provided.
· Mail Facility for sending written communication to the bank (similar
to cheque deposit facility)
· Utility payment like Electricity bill, Telephone bill etc.
· Product Information
· No person other than security guard is to be posted at such "non-branch" / "stand-alone" ATM centres.
Banks are not permitted to display products and services of other manufacturers / dealers on the screen of ATM.
No comments:
Post a Comment