RBI eases licensing norms for rural banks

Identifying regional rural banks as an important instrument for delivery of rural credit, the Reserve Bank on Tuesday simplified and liberalised the branch licensing policy for such banks.

In the Annual Policy Statement for 2006-07, the apex bank has now permitted RRBs to open or shift offices after obtaining clearance from the Empowered Committees.

Notably, hitherto the Regional Rural Banks had to seek RBI's approval by sending a request, which had to be duly recommended by the sponsor banks, through National Bank for Agriculture and Rural Development.

The Monetary and Credit Policy 2006-2007

Similarly, requests for conduct of foreign exchange business as limited authorised dealers (for current account transactions) will be approved on clearance by ECs, the RBI said.

In view of the importance of RRBs and to strengthen them further, the central bank had encouraged sponsor banks for state-wise merger of RRBs.

In this context, the government has issued notifications providing amalgamation of 93 RRBs into 27 new RRBs, sponsored by 15 banks in 12 states.  Further proposals for amalgamation of 36 RRBs into 13 new RRBs are under consideration, the Reserve Bank said.