Should banks open branches in residential areas?
The Reserve Bank of India (RBI) has directed the commercial banks to strictly adhere to norms for the acquisition of premises. The guidelines re-iterating the ‘Premises Acquisition Norms’ were issued following an application filed under the RTI Act which questioned the flouting of norms by operating on branches in Noida residential areas. These branches were ordered to be closed areas after a Supreme Court order in 2011.
The RBI said, “It has been observed in certain cases that banks have not complied with the above instructions while acquiring premises for their branches causing avoidable inconvenience to customers and possible reputational risk to the banks.” It adds, “It is therefore, reiterated that banks should strictly adhere to the policy and operational guidelines formulated by their board of directors for hiring premises on lease/rental basis in respect of metropolitan, urban, semi-urban and rural areas.”
It has been claimed that over I million customers were affected due to closure of the branches as they were transacting with the banks on residential premises in Noida for several years. It has been demanded that RBI should carry out country wide check to ensure that similar violations by banks are not happening anywhere else in the country.