RBI's inaction over bank branches in unauthorised premises despite SC order
Moneylife Digital Team 04 October 2012

The Supreme Court asked banks to shift their branches from residential properties in Noida as this was against the rules and regulations. The RBI, whose guidelines were openly violated, has not taken any action against the banks

Following a ruling by the Supreme Court on bank branches in unauthorised premises, local authorities had initiated action, however, the Reserve Bank of India (RBI) whose rules and guidelines were openly violated, still has not taken any action against the erring banks.
Commodore (Retd) Lokesh Batra, who has been actively pursuing this matter through a series of Right to Information (RTI) applications has now requested Dr Subir Gokarn, deputy governor of RBI to initiate action against defaulting banks and also carry out a nation-wide reality check to ensure that such violations are not happening at other places in the country.
In December 2011, the Supreme Court ordered that 104 branches of 21 major banks which since decades, had 'illegally' occupied residential areas in Noida, to shift out. The court ordered the Noida Authority to seal the branches of these banks if they failed to comply with the order.
Prior to 2005, most of these banks managed to get a license from RBI Lucknow, to open their branches in unauthorised residential locations, thereby violating the guidelines regarding acquisition/hiring/rental of premises for opening of a branch.
According to information procured by Cmde Batra, as per “the Regulation Act, 1948, Reserve Bank of India is empowered to impose penalty on banks in case of contravention of the provisions of the Banking Regulation Act, 1949, default in complying with any requirement of the Act or of any order, rule or direction made by RBI”.
What is interesting is that while the Noida Authority began following the SC order promptly to the extent of sealing three banks, no one thought of the poor, helpless customers who were at the receiving end; senior citizens would have to bear the maximum brunt of this sudden action.
The branches of banks affected by the Supreme Court order are: Allahabad Bank (6 branches); Axis Bank (5); Bank of Baroda (5); Bank of Maharashtra (3); Bank of India (9); Canara Bank (11); Central Bank of India (5); Corporation Bank (7); Dena Bank (2); HDFC Bank (18); ICICI Bank (6); Indian Overseas Bank (10); Oriental Bank of Commerce (25); Punjab National Bank (26); State Bank of India (35); Syndicate Bank (20); UCD Bank (2); Union Bank of India (6); IDBI Bank (3); Vijaya Bank (4); Union Bank of India (3).
On 2 February 2012, Cmde Batra sent an email to VS Das, executive director of RBI, requesting him to look in to the agony of helpless bank customers in Noida. He said, “I am writing this with urgent plea for RBI’s intervention to assure safety of assets of customers holding accounts and lockers in Noida. Starting 1 February 2012, the Noida Authority has started sealing these banks. This has triggered panic amongst customers as they are not sure about the safety and security of their bank assets and belongings kept in lockers. I submit you to issue necessary guidelines/instruction to concerned banks in Noida to ensure safety of lockers during their shifting process and other interventions to curb panic amongst customers.” 
However, he did not receive any response from the central bank. He then filed two applications under the RTI. Here are some interesting revelations from the reply received from RBI under the RTI...
On 16 March 2012, information under RTI by the RBI revealed that “a copy of the email dated 2 February 2012, had been forwarded to our Department of Banking Supervision (DBS), Lucknow, as the branches in Noida are under its jurisdiction.
The Department of Banking Reservation, RBI, Lucknow, indeed held an ‘emergency’ meeting with the controlling heads of the 21 banks, after Commodore Batra’s letter and that too on the same day—3rd February itself.  
(Incidentally, an official written by an assistant general manager to the chief general manager in charge of the Department of Banking Supervision reveals that “These 21 major banks have 211 branches out of a total of 260 branches of 41 banks in Noida, i.e. representation of 81% of branches.”)
The internal document of the RBI states, “a meeting with the controlling heads was held in RBI, Lucknow on 3rd February… The issue of sealing of banks… was discussed at length.”
“Considering the panic in the public following the newspaper reports on the issue, the house resolved as under:
“The customers will be advised by the banks through email, SMS, notice displayed at the branches and personnel posted at the branches regarding the alternate arrangements made for the conduct of smooth banking functions including locker operations up to 5 March 2012 (now extended to 30th March), the next date of hearing/time given by the Supreme Court…”
In another reply on 7th September, Deepak Singhl, CPIO, said, “...our Lucknow Office has advised that the Lead District Manager (LDM), Syndicate Bank, Noida (GB Nagar) has been authorised by all branch heads of the commercial banks in Noida to take up the matter with the RBI and IBA. The LDM has informed that most of the banks which had opened branches in non-commercial premises had violated the Noida Authority guidelines. Further most of the bank branches, which had not applied for the tender floated by the Noida Authority on the direction of the Hon’ble Supreme Court of India or not interested in land bidding have been shifted to new commercial premises and only those branches, which have the permission to stay there for a certain period of time, till their premises are ready (18 months from 16 July 2012) have not been shifted”. 
Dayananda Kamath k
9 years ago
there are instants of more than one branch functioning form the same premisies(virtual branch) branch is only on computeers of the branch and functioning for more than 2years and salary for the executives are paid without any work so far. matter brought to the notice but no action.
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