Shifting Bank Branch Doesn't Require RBI Permission Under 2017 Guidelines: Allahabad High Court Dismisses PIL

Recently, the Allahabad High Court denied relief to a litigant challenging the shifting of Indian Bank Branch to another village without the permission of RBI.

Petitioner, Gram Pradhan, approached the High Court against shifting of the branch of the Indian Bank located in Block Mau Aima, Tehsil Soraon, District Prayagraj to another location on grounds that it would cause great hardship to the villagers of nearby villages as well as that of his village.

It was pleaded that the Branch has been shifted to other village and in terms of Section 23 of the Banking Regulations Act, 1949, without permission of the Reserve Bank of India, the Branch cannot be transferred to another place.

Counsel for Reserve Bank of India argued that permission of the RBI was not a necessity. Reliance was placed on Clause 5.2 of Circular dated 18.05.2017 pertaining to Rationalisation of Branch Authorisation Policy - Revision of Guidelines, to argue that the permission of the District Consultative Committee was sufficient for changing locations of the bank branch and the same had been obtained.

Clause 5 of the aforesaid Circular pertains to Merger/Closure/ Shifting/Conversion of 'Banking Outlets'. Clause 5.2 reads as

“Merger, Closure and shifting of any rural 'Banking Outlet' as well as a sole semi urban 'Banking Outlet' would require approval of the DCC/DLRC. However, conversion of any rural or sole semiurban banking outlet into a full-fledged brick and mortar branch and vice versa would not require such approval. While merging/closing/shifting/converting a rural or a sole semi urban 'Banking Outlet', banks and DCC/DLRC shall ensure that the banking needs of the centre continue to be met.”

The bench of Chief Justice Arun Bhansali and Justice Kshitij Shailendra observed,

“When the said submissions indicating the non-requirement of permission from RBI were made, a plea was raised that though the Branch has been shifted about 5 kms away from Village Banka Jalalpur to Sultanpur Khas, the Branch continues to carry the name of Banka Jalalpur Branch, which is creating the issue, in the petitioner's making representation for opening of the Branch, the name of the Branch already exists. Further, the existence of business correspondent of the bank was also not disclosed, based on which time was granted.”

Observing that the counsel for the Bank had produced the order regarding change of name of the Bank Branch, the Court held that there was no substance in the public interest litigation raised by the petitioner. Accordingly, the PIL was disposed of.

Case Title: Lal Bahadur Patel v. Union of India and 6 others [PUBLIC INTEREST LITIGATION (PIL) No. - 914 of 2025]

Counsel for Petitioner: Vishal Tandon

Counsel for Respondents: Anurag Khanna (Sr. Adv.) assisted by Sumit Kakkar, Ugrasen Kumar Pandey, Pashupati Nath Tripathi,

Click Here To Read/Download Order