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CS Professional · Banking and Insurance - Laws and Practice · Banking Operations

Sahyadri Bank Ltd, a banking company, wants to shift one of its existing branches from one locality to another locality within the same city of Pune. Under the Banking Regulation Act, 1949, what is the position regarding prior RBI permission for this change?

Prior RBI permission is not required under section 23, because the section restricts only changes of location made otherwise than within the same city, town or village. Shifting a branch between localities of Pune stays within the same city, so the restriction does not apply.

  1. APrior RBI permission is required because any change of location needs it
  2. BPrior RBI permission is not required under section 23 because the change is within the same city, town or villageCorrect
  3. CPrior permission is required only if the branch has deposits above a prescribed limit
  4. DPrior permission is required from the Central Government instead of RBI

Explanation

Section 23(1)(a) requires prior RBI permission to change the location of an existing place of business only if the change is otherwise than within the same city, town or village. A shift within Pune stays within the same city, so the section does not require permission. The option claiming permission for any change ignores the 'otherwise than within the same city' wording.

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