The Reserve Bank of India (RBI) has liberalised the branch authorisation policy and also widened the role of bank boards, making them responsible for complying with the new guidelines. The RBI removed the restriction on tier-I branches, which was earlier linked to the number of branches opened in the unbanked areas. “Restriction on tier-1 branches has been removed, simplifying the regulations and obviating the need to give the lists of underbanked districts/underbanked states,” the RBI said. In the new guidelines, which come a year after the RBI announced a re-look at its April 2016 policy, the RBI has also changed the definition of what constitutes a branch. As against the earlier definition of considering all the outlets including extension counters and ATMs as a ‘branch’, the new provisions have changed the nomenclature to calling it as a ‘banking outlet’.
There will be a ‘banking outlet’ which will be open for minimum four hours a day and five day a week, while there is scope for a part-time banking outlet which will be a fixed point service unit but not comply with working hours requirement.
It also widened the role of the bank boards, which was limited to approving annual branch expansion plan earlier. “Financial inclusion being the overarching objective of the revised framework and the operational flexibility being given to banks, the Board has been given overall responsibility to ensure that all the guidelines are complied with,” it said.
The RBI had constituted an internal working group before coming out with the draft guidelines, which were put in public domain for comments in October last year. The final guidelines issued Thursday are operational with immediate effect, the central bank said.
Meanwhile, the RBI urged banks to appoint qualified chiefs to head the critical finance and technology functions. The central bank also came out with minimum qualifications for the chief financial officers (CFOs) and chief technology officers (CTOs). “Rapid innovations in banking and technology call for better risk governance in the areas of finance and technology,” it said in a notification.
“A CFO and CTO in banks’ management structure would play a crucial role in strengthening and sustaining the banks’ risk governance framework,” it added.
The RBI said a CTO should be an engineering graduate, or hold a Masters in Computer Applications (MCA) or equivalent qualification with a 15-year experience in banking information technology-related projects.