What changed
RBI expanded RRBs' resource base by allowing sponsor banks to provide lines of credit, inter-RRB term borrowings, and access to repo/CBLO markets. RRBs can now issue credit/debit cards, set up off-site ATMs without prior RBI approval, and apply for currency chests on a case-by-case basis. RBI also began reviewing forex norms to allow RRBs to handle non-trade current account transactions.
What it means for you
For RRBs, this package opens new funding avenues and product capabilities, enabling them to compete better and serve rural clients more effectively. Sponsor banks must actively facilitate these measures, including training RRB staff on repo/CBLO markets. Banks should prepare for increased credit flow to rural areas and potential operational changes in treasury and forex activities.
What you must do
- Sponsor banks: Provide lines of credit to RRBs at reasonable rates and facilitate their access to repo/CBLO markets.
- RRBs: Assess cost-benefit before setting up off-site ATMs and inform RBI's Regional Office (RPCD) immediately after opening.
- RRBs: Collaborate with sponsor banks to issue credit/debit cards and apply for currency chests via RBI Regional Offices.
- All banks: Monitor RBI's forthcoming communication on forex norms for RRBs to prepare for non-trade current account transactions.
Who it affects
Regional Rural Banks (RRBs), Sponsor Banks of RRBs, NABARD, RBI Regional Offices (RPCD)
Can RRBs now issue credit cards without RBI approval?
Yes, RRBs can issue credit/debit cards in collaboration with sponsor banks or other banks. Prior RBI approval is not needed for off-site ATMs, but RRBs must inform the respective RBI Regional Office (RPCD) immediately after opening for formal authorisation.
How can RRBs access the repo/CBLO market?
RRBs can enter ready forward transactions in government securities with SGL/CSGL account holders and participate in CBLO market via their Gilt Account. Sponsor banks should provide guidance and training, and RBI/NABARD will organise training programmes on regulatory and operational aspects.
What is the process for RRBs to open a currency chest?
RRBs must submit requests to their respective RBI Regional Office (RPCD). RBI will consider each request case-by-case, evaluating financial position, SLR/CRR compliance, inspection findings, management quality, and grading.