Mumbai, Aug. 6 (PTI): Giving greater operational freedom to banks, the RBI today allowed lenders to shift, merge or close branches, except in rural areas, at their "discretion".

The shifting, merger, or closure of any rural branch as well as a sole semi-urban branch would require the approval of the district consultative committee/district level review committee.

Further, in case of rural or semi-urban branches, banks should ensure that the banking needs of the centre continue to be met through either satellite offices/mobile vans or through business correspondents. The centre should not be left unbanked, the RBI said.

The central bank also said that customers of the branch should be informed well in time before actual shifting, merger or closure of the office.

Lenders should ensure that they continue to fulfil the role entrusted to these branches under the government-sponsored programmes and DBT (direct benefit transfer) schemes.

It further allowed banks to shift some activities of a branch in any centre because of space or rent constraints, and this can be done without the prior approval of the RBI.

"However, it may be noted that banking activity, i.e., deposit or loan business cannot be maintained at both places, and the new location for part shifting would have to be within 1 km of the existing location," it said.

They may also spin off certain activities such as government business into separate branches at their discretion.

Norms for primary dealers

To facilitate greater participation in corporate bonds by standalone primary dealers, the RBI today doubled the exposure ceiling limits for single borrowers to 50 per cent of the latest audited net owned funds (NOF).

For group borrowers, the exposure ceiling has been raised to 65 per cent from 40 per cent.

"To facilitate greater level of participation in corporate bonds by SPDs, it has been decided to increase exposure ceiling limits in respect of single borrower/counterparty from 25 per cent to 50 per cent of latest audited NOF.

"And in respect of group borrower from 40 per cent to 65 per cent of latest audited NOF only for investments in AAA rated corporate bonds," the apex bank said in a notification.