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Growing gainfully Just 660 days! Target over-ambitious... A development bank for BRICS Small finance banks offer high interest rates Who is the real beneficiary? Governance in Reverse Gear? Why priority status? Aadhaar, niraadhaar and banking How ‘secure’ are the secured loans? Big bank merger, bigger expectations Smart banking in smart cities One down in private sector Thirty more cities seek to become SMART How okay are new banks? Small finance payment banks... Well-lived... Lacklustre credit expansion Ferrying digital banking to Lakshadweep Bottomlines shrink, bad loans rise... Insatiable appetite for credit Growing volume of stressed assets… Banking on Risk Perhaps small is more beautiful than big! Capital base of regional rural banks raised Drastic decline in asset quality Cautious and considerate Ernakulam excels... Reaching the Unreached… Indian customers are tech savvy It’s a war on black money, support it. A new development bank rising in the east… Fund healthcare clinics in villages... Drop in SLR- sparing lendable resources Greet Lakshmi the banking robot Small is ‘more’ beautiful Managing NPAs... The collaboration suite of cyber criminals Anytime banking to anywhere banking Stage set for Indian ‘avatar’ of foreign banks Banking in Telangana Merger mania haunts banks Bank deposits account for 46.3 per cent of household savings Cradle of banks to a smart city... Financial inclusion vs unclaimed deposits The paradox: clamour for the Goliath and David Two banks: their jubilees and performances From lazy banking to easy banking Targets continue to be ad hoc Holy or unholy? Monetary policy continues to adopt dis-inflationary path Too big to fail and too small to sail Payment banks have arrived United India Insurance - Rs 110 crore losses have been claimed till now due to floods in Tamil Nadu Hesitancy in announcing year-end results Mega merger is on Grows Bigger Cut in repo rate – lower than expected Needed a Banking Atlas Another route for achieving financial inclusion Banking overhauling or reorganisation? All that glitters is not gold... Nothing much can happen…. New bank licences, at last... Reaching out: is it slowing down? A bank for women, by women Why any time money? New capitals of Migrant banks Emerging crisis What is the priority – mergers or NPA reduction? Good, bad and ugly Rationalised LVB- A supermarket of financial services
 
Rationalised
In accordance with the announcement made in the first Bi-monthly Monetary Policy Statement 2016-17, an Internal Working Group on Rationalisation of Branch Authorisation Policy was constituted by the RBI.

ITS REPORT WAS released in October recommending the liberalisation of the branch licensing policy. The Working Group has emphasised the need for further rationalisation of the branch licensing policy in tune with the rapid changes that have taken place in the diversified nature of bank branches. “With a view to facilitating financial inclusion and providing operational flexibility on the choice of delivery channel, it was considered necessary to redefine branches and permissible methods of outreach keeping in mind the various attributes of the banks and the types of services that are sought to be provided,” explained in the preamble of the Report.

Redefining banking outlets:

Thanks to some of the ad hoc decisions relating to branch expansion, the banking sector has several branches including those of the ‘branchless banking model.’ There are three lakh services outlets under this model, while the total number of brick and mortar branches is 134,014 as on June 2016. Besides, there are 211,914 ATMs.

The new definition of banking outlet is “a fixed point service delivery unit, where services of acceptance of deposits, encashment of cheques, cash withdrawal or lending are provided for at least  4 hours per day for five days a week. It carries uniform signage with name of the bank, contact details of the controlling authorities and complaint escalation mechanism.” Any delivery unit of the bank, not complying with the above prescriptions will be considered a ‘part-time banking outlet.’

Rural-orientation continues to be a key tune. Banks are required to ensure that 25 per cent of the new branches are opened in unbanked rural centres. The policy statement defines the unbanked rural centre as one “where no other CBS-enabled bank carrying out customer based banking transactions,” exists.


Realigning the branches of small finance banks

The Report has asserted the need for realigning the branches of the small finance banks and as well as the non-banking financial institutions entering into the banking field. It said: “grandfathering of MFI/NBFC structures of Small Finance Banks to be provided to facilitate an orderly transformation and to minimize the risk of transition. The existing network of these entities would be frozen as on the date of their getting ‘licence’ for the bank.” Within a year of commencement of business, these banks are required to comply with the norm of opening 25 per cent of the banking outlets in unbanked rural centres. In order to prompt the new banks to extend their business network into the north-eastern states, they are permitted to open their banking outlets anywhere in these states, not necessarily in the unbanked centres only. 

 

Improving the data base

 About the future pattern of branch management, the Report has made an important recommendation. A new data system may be devised by the banks “which is capable of capturing the locations and transactions carried out by all banking outlets including mobile business correspondents and non-fixed locations and services rendered through the ‘hub and spoke’ models which will aid in capturing the degree and level of financial inclusion and will be useful for future policy reviews.”  Another innovative suggestion is that “the data needs to be GIS mapped to enable getting a complete picture of banked and unbanked centres on the country’s map, at all times.”

    In addition to this it is also recommended that “the banks should set internal financial inclusion targets and collate and compile tier-wise/center-wise data and monitor the transactions in these outlets to ensure that banking services are being transacted.

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