* Only one branch to be open every 5 km in big cities -sources
* In countryside, banks to open on alternate days -sources
* Rural operations to focus on disbursing welfare cash -sources (Adds details of the plan and measures taken by banks so far)
By Neha Dasgupta and Nupur Anand
NEW DELHI/MUMBAI, March 26 (Reuters) - India's central bank and major lenders are working on a plan to close most branches during the country's lockdown, aiming to prevent tens of thousands of employees from becoming infected with the coronavirus, four sources familiar with the matter told Reuters.
The world's second most populous nation with 1.3 billion people is still very much a cash society and banks have been exempted from a 21-day lockdown that began this week as they are considered an essential service.
Under the plan, there would likely be only one bank branch open every five kilometres in major cities, the sources said, declining to be identified as the discussions about the closures have not been publicly disclosed.
In rural areas, where 70% of Indians live and are often completely dependent on cash, banks will likely operate on alternate days with staff just focusing on the disbursal of welfare money to the poor, one of the sources said.
"The general guideline is that branch operation should largely be for villages just to take care of those people who are not familiar with digital transactions," a senior banker with a state-run bank told Reuters.
"Informally, banks are talking to each other to cope up with a situation where there will be some rush for cash withdrawal because it is expected the government will provide cash for the poor directly into their accounts."
Prime Minister Narendra Modi's government on Thursday unveiled an economic stimulus package of 1.7 trillion Indian rupees ($22.6 billion) which will also include direct cash payments to the poor.
Some of banks have already begun testing the planned approach in certain regions although it was not immediately clear when a full rollout would occur, two of the sources said.
The Reserve Bank of India and the Indian Banks' Association did not immediately respond to requests for comment.
India has reported 649 coronavirus cases and 13 deaths.
In a bid to discourage account holders from visiting branches, the banking association has advised its 255 member banks to suspend non-essential services until further notice.
Most lenders have already pared opening times to a few hours and are urging customers to use digital services.
The plans have been under consideration for about a week, one source said. Senior central bank officials were on Wednesday checking the digital banking preparedness of all banks, another of the sources said.
Banks are also considering allowing inter-operable services, which would mean that customers of one bank would be able to withdraw from any other bank and the transaction would be settled between the lenders, an official with a state-run bank said. ($1 = 75.3200 Indian rupees)
(Reporting by Neha Dasgupta and Nupur Anand; Additional reporting by Swati Bhat; Editing by Edwina Gibbs)
Our Standards: The Thomson Reuters Trust Principles.