The Hindu Business Line : Service area norms for banks, RRBs relaxed

COMMERCIAL banks and regional rural banks (RRBs) would, henceforth, be free to lend in any rural and semi-urban area and borrowers would have the choice of approaching any branch for their credit requirements.

In a bid to give easy access to rural borrowers for institutional credit from any bank of their choice at a competitive price and to provide banks, public and private, with a level-playing field, the Reserve Bank has relaxed the service area norms.

In a notification to commercial banks and RRBs here on Thursday, the central bank has said that the allocation of villages among rural and semi-urban branches of banks will, however, continue to be applicable for lending under Government-sponsored schemes.

The apex bank has also done away with the requirement of non-service area branches obtaining a `no due certificate' from the service area branch prior to lending. Banks have, however, been advised to take necessary steps to avoid multiple financing.

Annual Credit Plans will be based on the Potential Linked Plans (PLPs) prepared by Nabard. The particulars of the potential available in different sectors (as indicated in the PLP) will be communicated by the convenor of the Block-level Bankers' Committee (BLBC) to all the branches in the block. The branches, in turn, will prepare branch credit plans based on such communication.

Branch credit plans would be aggregated by the BLBC convenor bank into block credit plans. These would, in turn, be aggregated into district credit plans, which would eventually be aggregated into State-level credit plans. In view of this arrangement, the village credit plans need not be prepared by the bank branches, RBI has said.

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