Microfinance Focus, July 18, 2011: Keeping in view its goal of bringing banking services to rural areas, Reserve Bank of India has issued a notification to all Scheduled Commercial Banks advising them to allocate at least 25 percent of the total number of branches proposed to be opened during a year in unbanked rural centres.

An unbanked rural centre would mean a rural (Tier 5 and Tier 6) centre that does not have a brick and mortar structure of any scheduled commercial bank for customer based banking transactions.

According to the revised branch authorization policy, authorisation for branches in Tier 1 and Tier 2 centres will now factor in whether at least 25 percent of the total number of branches to be opened during a year is proposed to be opened in unbanked rural centres.

Since there is a continuing need for opening more branches in underbanked regions for ensuring more uniform spatial distribution, banks would be provided incentive for opening such branches. Accordingly, for each branch proposed to be opened in Tier 3 to Tier 6 centres of underbanked region, authorisation will be given for opening of a branch in a Tier 1 centre, RBI said.