RRBs: NRO/NRE/FCNR Deposit Authorisation for Negative Networth Banks
Current · Source: Reserve Bank of India · RBI/2007-2008/157 · issued 09 Oct 2007 · ~1 min read
Quick answerRBI now allows RRBs with negative networth but three consecutive years of net profit to seek NRO/NRE/FCNR authorisation via the Empowered Committee on a case-by-case basis, expanding eligibility beyond fully viable banks.
The rule, in the simplest words
RRBs with negative networth but 3 years of net profits can seek NRO/NRE/FCNR authorisation.
RRBs must prepare detailed financials and supervisory comfort evidence for the Empowered Committee.
The Empowered Committee will review cases and recommend to RBI's Central Office for authorisation.
How it plays out — a real example
A forex & trade-finance officer in Indore, working for a Regional Rural Bank, noticed that their bank had been consistently profitable over the past three years despite having a negative networth. They prepared a detailed financial report and supervisory comfort evidence, and submitted it to the Empowered Committee. After a thorough review, the committee recommended their bank for authorisation, and they were able to start offering NRO/NRE rupee accounts and accepting FCNR deposits, boosting their deposit base and fee income.
What changed
Previously, only RRBs meeting full viability criteria could open/maintain NRO/NRE rupee accounts and accept FCNR deposits. This circular permits the Empowered Committee to examine cases of RRBs with negative networth but consistent net profits for the last three years, and recommend them to RBI's Central Office for authorisation.
What it means for you
This gives struggling but profitable RRBs a pathway to offer foreign currency and NRI accounts, potentially boosting their deposit base and fee income. Banks must now prepare detailed financials and supervisory comfort evidence for committee review, adding compliance overhead but opening new revenue streams.
What you must do
Review your RRB's net profit track record for the last three financial years.
If networth is negative but profits are consistent, prepare a case for the Empowered Committee with supervisory comfort documentation.
Engage with your sponsor bank or regional office to coordinate the application process.
Update internal policies and systems to handle NRO/NRE/FCNR account operations if authorisation is granted.
Who it affects
Regional Rural Banks with negative networth, RRBs earning net profits for three consecutive years, Empowered Committee members, RBI Central Office (RPCD)
❓ Common questions
What is the key eligibility change for RRBs under this circular?
RRBs with negative networth but net profits for the last three years can now be considered for NRO/NRE/FCNR authorisation on a case-by-case basis by the Empowered Committee.
Does this circular apply to all RRBs automatically?
No, it only applies to RRBs that apply and are recommended by the Empowered Committee; it is not an automatic approval.
What documents should an RRB prepare for this application?
Financial statements showing net profits for three years, networth details, and evidence of supervisory comfort as assessed by the Empowered Committee.
📜 Read the original circular — full text as issued by RBI
RBI/2007-2008/157
RPCD.CO. RRB. No. BC. 29 /03.05.33(C) / 2007-08
October 09, 2007
All Regional Rural Banks
Dear Sir
Authorisation to open / maintain NRO / NRE accounts in Rupees and accept FCNR deposits by RRBs
Please refer to our circular RPCD.CO.RRB.No.BC 106/ 03.05.33(C)/2006-07 dated June 28, 2007 prescribing the eligibility criteria for RRBs to open/ maintain customers' NRO/NRE accounts in rupees and accept FCNR deposits. The matter of permitting RRBs which are currently viable to accept NRO / NRE / FCNR deposits has been examined and it has been decided that the cases of RRBs having negative networth but earning net profits for the last three years may be examined by the Empowered Committee on a case to case basis from the supervisory comfort angle and recommended to Central Office for allowing opening / maintaining NRO/NRE accounts in Rupees and accepting FCNR deposits.
Yours faithfully
(C.S. Murthy)
Chief General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2007-2008/157 · issued 09 Oct 2007. The plain-English explanation above is BankPulse’s own independent summary.
Update internal policies and systems to handle NRO/NRE/FCNR account operations if authorisation is granted.
💻 IT / Systems
Engage with your sponsor bank or regional office to coordinate the application process.
📜 Compliance
Review your RRB's net profit track record for the last three financial years.
If networth is negative but profits are consistent, prepare a case for the Empowered Committee with supervisory comfort documentation.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (Regional Rural Banks with negative networth, RRBs earning net profits for three consecutive years, Empowered Committee members, RBI Central Office (RPCD)), your first concrete step on “RRBs: NRO/NRE/FCNR Deposit Authorisation for Negative Networth Banks” is: “Review your RRB's net profit track record for the last three financial years.” (RBI issued this 09 Oct 2007).
Action required: Review your RRB's net profit track record for the last three financial years.
Action required: If networth is negative but profits are consistent, prepare a case for the Empowered Committee with supervisory comfort documentation.
Action required: Engage with your sponsor bank or regional office to coordinate the application process.
Action required: Update internal policies and systems to handle NRO/NRE/FCNR account operations if authorisation is granted.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=3864&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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