Speaking to heads of various commercial banks at a meeting organised by Bankers' Club in Hyderabad on Monday, the RBI governor said it is time for the banking sector to decentralise its authority and strengthen the regional offices.

On RBI, Jalan said all its regional offices are full-fledged bank centres and are allowed to take independent decisions relating to banking operations.

He stressed the need that even the commercial banks shall adopt the same system.

"Strengthening the regional offices is as important as taking policy decisions like fixing interest rates," Jalan said.

The commercial banks are facing competition not only from other banks but also from financial intermediaries, which is a welcoming feature, Jalan said. He said the financial sector reforms have created openings for financial intermediaries which the commercial banks should take benefit and shall not regard as competition.

In a developing economy like ours the role of financial intermediaries like NBFCs, Urban co-operative banks etc, will benefit the banks, he opined.Earlier in another function, Jalan has formally coffered "scheduled status" to city-based Vasavi Co-operative Urban Bank. Speaking on the occasion he stressed the need for legislative frame work for the Urban banks which will provide free and timely operational advantage.

He said the Urban banks shall follow prudential norms which will provide safety net to its customers from possible risks. Out of 2000 and odd Urban banks operating in the country with Rs 50,000 crore deposits only 36 have included in second schedule so far.

The urban banks have lots of weaknesses which cannot be ignored. He felt the only way out will be legislative frame work for its functions.