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Our Bureau

Mumbai , Sept. 9

THE Reserve Bank of India will now give aggregate approvals on an annual basis for the opening, closing, or shifting of all categories of branches and offices, including ATMs.

According to a notification issued by the central bank, the approval will be given through a "consultative and interactive process" and would be valid for one year from the date of communication.

This will replace the existing system of granting authorisations for opening individual branches from time to time. Meanwhile, the current policy for authorisation of overseas branches of Indian banks will continue.

"It has been decided to put in place a framework for a branch authorisation policy that would be consistent with a medium-term corporate strategy of banks and public interest," said the RBI notification.

The policy will also be applicable to the branch expansion of foreign banks. ATMs will, however, not be included in the number of branches for such computation. India's WTO commitments will also be taken into consideration in the case of foreign banks.

While assessing the request for authorisation of branch expansion, the RBI would also consider certain factors. The central bank will, for instance, give weightage to the facilities provided by banks to the public, particularly in under-banked areas, and the actual credit flow to the priority sector.

The pricing of products and overall efforts for promoting financial inclusion will be evaluated. This includes introduction of appropriate new products and the enhanced use of technology for delivery of banking services.

The RBI would also assess the bank's policy on minimum balance requirements and whether depositors have access to minimum banking or "no frills" banking services.

The other parameters for evaluation include acceptance of deposits, provision of credit, and quality of customer service as made evident by the number of complaints received and the redressal mechanism that the bank has in place for the purpose.

Broadly, the activities of the banking group, the nature of the relationship of the bank with its subsidiaries, affiliates, and associates, quality of corporate governance, proper risk management systems, and internal control mechanisms will also be placed under the scanner by the RBI.

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