The Reserve Bank of India (RBI) has allowed the banks to shift, merge or close branches in urban areas without seeking its prior permission.

The central bank in a notification on its website said that the banks can now "shift, merge or close all branches except rural branches and sole semi-urban branches at their discretion", without seeking its prior permission.

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However, the shifting, merger or closure of the office needs to be reported at Department of Banking Statistics of RBI.

Further, RBI has allowed the banks to shift some activities from a branch, due to space or rental restraint without seeking RBI’s consent.

Also, banks are now not required to report details of launching new mobile branches, automated teller machines (ATMs) or call centres.

Under the new rules, banks need to ensure that customers are informed well in advance of the shift, merge, closure or conversion to avoid any inconvenience.

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Banks also need to continue to fulfill the role entrusted to the merged, shifted or closed branches under government-sponsored programmes and direct benefit transfer schemes.

"However, it may be noted that banking activity, that is, deposit or loan business, cannot be maintained at both places, and the new location for part-shifting would have to be within 1 km of the existing location. They (banks) may also spin off certain activities such as government business into separate branches at their discretion," RBI added.