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Anytime banking to anywhere banking
The Reserve Bank of India has relaxed some of the rigidities in its Branch Licensing Policy in August this year. “Banks may shift, merge or close all branches except rural branches and sole semi-urban branches at their discretion” the new guidelines say.

“The place of banking” and the ‘banking hours’ of the Indian banking sector were regulated almost from the beginning of joint stock banking. During the early stages of banking development, there was no uniformity in the banking hours of different banks and in some cases for the branches operating in different locations. According to the details available, one of the oldest banks in Mangalore had working hours from 8 AM to 11 AM and from 2 PM to 5 PM during its infancy. From six hours of banking business, it was reduced to five hours later.

In January 1952, the Government of India constituted the All India Industrial Tribunal (Bank Disputes). The award of this Tribunal brought about, for the first time in Indian banking, uniform pay scales for bank employees in certain categories of banks and the working conditions standardised. Under this Award, banking hours were reduced to four hours a day, from 10.00 AM to 2.00 PM. Another development, which reduced the working hours of bank employees, was the enactment of the Shops and Establishment Act of 1947. Banks had no say in revising the duration of banking hours.


Anytime banking...

The concept of ‘Anytime Banking’ entered Indian banking only in 1987, when a foreign bank installed the first ATM in Bombay. Since then the number of ATMs have grown exponentially. Today, commercial banks have more ATMs than brick and mortar branches. There are 1,83,887 ATMs in India, open 24 hours on all days, enabling the customers to withdraw money at any time of the day or night. Out of them 92,588 ATMs are located outside the branch premises.

The footfalls at the branches has drastically declined, as customers can now go to any of the ATMs to draw cash, without visiting the bank branch, where they have their accounts. Cash could be withdrawn from ATMs at anytime during day or night and even on bank holidays. Incidentally, even when the banks go on strike, ATMs for cash withdrawal are available.


Anywhere banking...

Anywhere banking, however, was not possible till recently. While the customers can go to any ATM located anywhere in India, the banker cannot go anywhere to set up a branch, without the permission of the Regulator. In 1946, the Banking Companies (Restriction of Branches) Bill 1946 was passed, prohibiting banks from opening new branches or shifting the location of the existing branch without obtaining prior sanction in writing from the Reserve Bank. Before giving permission for branch opening, the RBI had to consider the financial condition of the bank seeking permission, adequacy of its capital structure and its earning-prospects. There were conditions stipulating minimum distance to be maintained in locating the new branch in towns, where a bank branch was already existing.

After nationalisation in 1969, stringent conditions continued to govern the opening of new urban and metropolitan branches. In order to expedite the rural branch expansion programmes, the Reserve Bank granted rural branch licences in principle at the District Consultative Committee (DCC) Meetings convened by the Lead Bank at the district level itself. The procedure was simplified further subject to the approval at the DCC. “Shifting, merger, or closure of any rural branch as well as a sole semi urban branch would require approval of the DCC/DLRC,” the new guidelines indicate.

In their own interest, the banks should avoid the clustering of their branches and ATMs in selected centres, as is evident from the current pattern of their dispersion in some localities of urban and metropolitan centres.

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