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