According to the autonomy policy inked by the finance ministry, state-owned banks can open or shut branches as per their requirement, without prior approval from the government. The policy does not mention rural branches in particular.
There is a grey area when it comes to rural branches. As of now, we are not allowed to shut any branch in rural areas. However RBI is looking into the matter and would come up with a policy soon, a source said.
Notably, Left parties have shown their resentment over the autonomy policy. We will take it up with the government. By allowing banks to shut branches including those in rural markets, the government is moving away from its social responsibility, CPM member of Parliament Gurudas Dasgupta told FE.
Though he admitted that most rural branches would be loss making, he opposed their closure.