According to the draft circular, commercial banks will be permitted to open a maximum of five transaction offices and branches in the first year of operation.

The new transaction offices and branches will also have to observe specific regulations regarding the efficiency of their business activities, operational safety, scale and financial capacity.

Commercial banks must ensure adequate profits in the year before they plan to open up more transaction offices or branches and have bad debts of less than 3 percent. In addition, eligible banks must have effective management systems and a secure information technology infrastructure.

Industry analysts say that expanding networks helps domestic commercial banks gain an advantage. However, this could reduce the efficiency of their operations and even undermine the entire banking system if any expansion is beyond their capacity in terms of capital and administrative abilities.