RBI/2004-05/169
DBOD.BL.BC. 39 /22.01.001/ 2004-05
September 10, 2004
Bhadra 19, 1926(S)
All Scheduled Commercial Banks
(Excluding RRBs)
Dear Sir,
Section 23 of the Banking Regulation Act, 1949 - Opening of
central processing centres/ back offices etc.
Please refer to paragraph 2.6 of the Master Circular No. DBOD.BL.BC.
46/ 22.01.001/ 2003 dated 18th November 2003, in terms of which banks can
open Service Branches / Regional Collection Centres for facilitating clearing
and allied works.
2. We have been receiving requests from banks for setting up
branches such as Central Processing Centres, Core Banking Centres, etc. to perform
back-office functions such as data / document processing, issuance of cheque
books etc. A common feature in all such arrangements is that there is no
interface with the customers.
3. Taking into account the changes brought in as a result of
the introduction of technology and the need to cut down operational costs while
enhancing customer service, it has been decided to allow banks to open branches
which will attend exclusively to data processing, verification and processing
of documents, issuance of cheque books, demand drafts etc. on requests received
from other branches and other functions incidental to banking business having
no interface with customers.
4. It has also been decided to issue licence for such branches
under the 'Service Branch' category. Accordingly, a 'Service Branch' can attend
to clearing and allied banking activity which may include processing centres,
back office functions and those incidental to banking business etc., but
no interface with the customers will be permitted.
5. Banks can therefore apply and obtain licence as set out
in paragraph 2.6 of the Master Circular for opening a service branch to either
take care of data processing/ core banking solution and/ or document processing,
issuance of demand drafts, cheque books, fixed deposit receipts etc. in respect
of requests received from other branches. It is clarified that 'Service Branch'
shall not include a call centre or a phone banking facility or any
other facility that involves customer interface.
6. It is also clarified that conversion of a service branch
into any other category of banking branch will not be permitted.
Yours faithfully,
(Prashant Saran)
Chief General Manager
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