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Opening of central processing centres/ back offices by banks

Taking into account the changes brought in the banking, as a result of the introduction of technology and the need to cut down operational costs while enhancing customer service, RBI has been decided on 10th September 2004, to allow banks to open branches which will attend exclusively to data processing, verification and processing of documents, issuance of cheque books, demand drafts etc. on requests received from other branches and other functions incidental to banking business having no interface with customers.

It has also been decided to issue licence for such branches under the 'Service Branch' category. Accordingly, a 'Service Branch' can attend to clearing and allied banking activity which may include processing centres, back office functions and those incidental to banking business etc., but no interface with the customers will be permitted.

Banks can therefore apply and obtain licence for opening a service branch to either take care of data processing/ core banking solution and/ or document processing, issuance of demand drafts, cheque books, fixed deposit receipts etc. in respect of requests received from other branches. It is clarified that 'Service Branch' shall not include a call centre or a phone banking facility or any other facility that involves customer interface.

RBI has also clarified that conversion of a service branch into any other category of banking branch will not be permitted.

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