Within days of new RBI Governor Raghuram Rajan making comments to this effect, the central bank has allowed lenders to open branches, including in big cities, without its permission provided they fulfill certain conditions.

In a notification yesterday, the Reserve Bank of India said that the general permission to domestic scheduled commercial banks other than Regional Rural Banks, is now allowed to open branches in Tier 1 centres. It said that the objective of this move is to further liberalise and rationalise the branch authorisation policy.

However, it said that the automatic permission is subject to certain conditions including at least 25 per cent of the total number of branches opened during the financial year must be opened in unbanked rural tier 5 and tier 6 centres. Unbanked centres refer to locations that do not have a brick and mortar structure of any scheduled commercial bank for customer based banking transactions.