Opening of new bank branches is governed by the provisions of Section 23 of the Banking Regulations Act, 1949. It is, therefore, mandatory for commercial banks to obtain prior approval of the Reserve Bank of India (RBI) before opening a new branch/office. However, in order to provide infrastructure support for banking services in unbanked blocks of the country, the Government has allocated an amount of Rs.100 crore during the current year as a one-time grant-in-aid to ensure provision of at least one center/Point of Sales (POS) in such blocks.
In a letter written by the RBI in June, 2008, the State Governments/UTs have been asked to explore the possibility of routing Government payments including those under NREGS to various beneficiaries through the banking system. Banks have already initiated measures to appoint business correspondents/facilitators, open no frills accounts, distribute smart cards and propagate financial literacy and credit counselling with a view to facilitating, inter alia, greater use of the banking system for payments.
This information was given by Minister of State for Finance, Shri Namo Narain Meena in written reply to a question raised in Lok Sabha today.