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How rural banking strengthened post demonetisation

The number of branchless mode / business correspondents (BCs) of scheduled commercial banks in rural areas has also increased from 3.37 lakh in March, 2014 to 5.15 lakh in March, 2018

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In the wake of demonetisation in November 2016 which banned the circulation of Rs 1,000 and Rs 500 old currency notes, there was a need felt of bringing non banked population to the network of banking services. As a result, the number of rural branches of Public Sector Banks (PSBs) shot up in the financial year 2017-18 which saw the opening of 2,157 rural branches, followed by 656 in 2016-17 and 123 in 2018-19.

PSB branches opened in three year





Total Branches




Rural Branches




Source: Reserve Bank of India

Reserve Bank of India (RBI) has rationalised its Branch Authorisation Policy and granted general permission to domestic scheduled commercial banks, excluding Regional Rural Banks (RRBs), including public sector banks, to open banking outlets at any place in the country, without seeking prior approval of RBI in each case, subject to at least 25 percent of the total number of banking outlets opened during a financial year being in unbanked rural centres (Tier 5 and Tier 6 centres, having population less than 10,000). For this, banking outlets opened in any centre having population less than 50,000 in North Eastern states and Sikkim and also Left Wing Extremism (LWE) affected districts as notified by the Government of India are also considered as equivalent to opening of banking outlets in unbanked rural centres, said, Anurag Singh Thakur, Minister of State for Finance & Corporate Affairs in a written reply to a question in Rajya Sabha Tuesday.
Pradhan Mantri Jan-Dhan Yojana (PMJDY) was launched inter-alia with the objective to provide universal access to banking facilities. Under the scheme all rural and semi-urban areas were mapped into 1.59 lakh Sub-Service Areas (SSAs) where one SSA catering to 1,000 to 1,500 households. While 0.33 lakh SSAs have been covered with bank branches, 1.26 lakh SSAs, have been covered by deployment of interoperable bank mitras. The number of branchless mode / business correspondents (BCs) of scheduled commercial banks (SCBs) in rural areas has also increased from 3.37 lakh in March, 2014 to 5.15 lakh in March, 2018. The deployment of interoperable BCs with micro-ATMs is also augmenting the services provided by bank branches, especially in rural areas, Thakur added.

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