Bangladesh Bank (BB) on Thursday issued a new regulation, directing the banks to set up at least 60 per cent of sub-branches outside the city corporations and A-class municipalities.
Issuing a circular to this effect, Banking Regulation and Policy Department (BRPD) of the central bank said the activities of sub-branches having a maximum floor space of 1000 square feet will have to be supervised by the nearest supervisory branch and it must be outside a one-kilometre area from the supervisory branch.
But if there is a necessity to set up a sub-branch in a special area covering a special group of people under the financial inclusion programme, the BB will consider it and relax the condition, it said.
Minimum two officials will have to be employed in each sub-branch and it will not be allowed to run foreign trade-related activities, the circular said.
According to the latest regulation, the banks must submit their network expansion-related annual plan after the approval by their board to the BB within November of a year and the bank can start expanding their network in the following year after getting a green signal of the central bank.
It said the branches inside the city corporations and A-class municipalities will be called Shahar Shakha (urban branch) and the rest will be named Polli Shakha (rural branch).
Banks cannot open more than one urban branch in each town a year. If an area is upgraded into a city corporation or a medium or lower-tier municipality graduates into a top-tier one, the status of the branches will change accordingly.
The central bank came up with the latest changes in its guideline on setting up business centres, renting or leasing, with a view to helping the banking industry expand its reach and taking banking services to the unbanked people, thus accelerating financial inclusion.
The central bank said banks can turn approved branches into SME or agriculture service-based ones and those branches have to be outside divisional cities or city corporations and in the areas that don't have access to banking services.
The SME or agriculture branches can run all banking activities except for foreign currency-related transactions and loans equal to at least 50 per cent of the deposits with the branches would have to be disbursed in the areas covering the branches.
Banks will not have to take prior approval from the BB while setting up electronic booths. However, only digital transactions can be carried out at those booths, according to the circular.
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