On November 28, 2025, the Reserve Bank of India (RBI) unveiled the Commercial Banks – Branch Authorisation Directions, 2025. These directions, issued under Sections 23 and 35A of the Banking Regulation Act, 1949, aim to modernize branch licensing, accelerate financial inclusion, and strengthen digital banking infrastructure across India. With immediate effect, these guidelines replace all previous instructions on branch authorisation, signaling a new era for banking operations.
Who Do These Directions Apply To?
The directions cover Commercial Banks, including:
- Banking companies (except Small Finance Banks, Payment Banks, and Local Area Banks)
- Corresponding new banks
- State Bank of India
Special provisions apply to foreign banks operating in branch mode.
Key Highlights
1. General Permission for Opening Banking Outlets
- Freedom with Responsibility:
Scheduled commercial banks can now open Banking Outlets in Tier 1 to Tier 6 centers without prior RBI approval, unless specifically restricted. - Financial Inclusion Mandate:
At least 25% of new outlets in a financial year must be in Unbanked Rural Centres (URCs). - Tier Classification (as per Census 2011):
- Tier 1: Population 1,00,000 and above
- Tier 6: Less than 5,000
Failure to meet the 25% URC norm may lead to penalties, including restrictions on opening Tier 1 branches.
2. Digital Banking Units (DBUs): The Future of Banking
RBI has given a big push to digital banking by allowing banks with prior digital experience to open DBUs without prior approval.
What is a DBU?
A Digital Banking Unit is a specialized hub offering:
- Liability Products: Savings, Current, Fixed Deposit accounts.
- Asset Products: Retail and MSME loans with end-to-end digital processing.
- Digital Services:
- Fund transfers (NEFT/IMPS)
- e-KYC and Video KYC
- Grievance redressal
- Onboarding for schemes like APY, PMJJBY, PMSBY
Cybersecurity and customer education are mandatory for DBUs, ensuring safe and inclusive digital banking.
3. Role of the Board of Directors
Banks must adopt Board-approved policies for:
- Opening, merging, shifting, and closing outlets.
- Operating DBUs and engaging Business Correspondents (BCs).
- Offering Doorstep Banking Services.
Regular monitoring of financial inclusion targets, DBU performance, and BC operations is essential.
4. Business Correspondent Model: Expanding Outreach
To deepen financial inclusion, banks can engage BCs such as:
- Retired bank employees, NGOs, MFIs, cooperatives.
- Non-deposit NBFCs (under strict conditions).
BCs can handle:
- Deposits and withdrawals
- Small-value credit
- Insurance and pension products
- Fund transfers and remittances
Safeguards include:
- Strict KYC compliance
- No direct customer charges
- Real-time transaction recording via ICT devices
5. Doorstep Banking: Convenience at Your Door
Banks may offer doorstep services like:
- Cash pick-up and delivery
- Instrument collection
- Draft delivery against secure requests
Conditions:
- Proper KYC compliance
- Transparent charges
- Grievance redressal mechanism
6. Reporting and Compliance
Banks must report:
- Opening, closure, or shifting of outlets via CISBI portal (https://cisbi.rbi.org.in).
- Monthly DBU performance updates.
- Digital banking segment disclosures under AS-17.
Why These Directions Matter
The Branch Authorisation Directions, 2025 reflect RBI’s vision for:
- Inclusive Banking: Mandatory rural outreach.
- Digital Transformation: DBUs and tech-driven BC models.
- Customer Convenience: Doorstep banking and grievance redressal.
Banks that align with these norms will not only ensure compliance but also unlock new growth opportunities.
Conclusion
The RBI Branch Authorisation Directions, 2025 are a game-changer for India’s banking sector. By blending physical expansion with digital innovation, RBI aims to create a robust ecosystem that serves both urban and rural customers efficiently.