What changed
RBI notified the inclusion of 8 amalgamated Regional Rural Banks (RRBs) in the Second Schedule to the RBI Act, 1934, via notification dated January 27, 2009. Simultaneously, 29 erstwhile RRBs were excluded from the same Schedule, reflecting their dissolution post-amalgamation.
What it means for you
For banks, inclusion in the Second Schedule grants statutory recognition, enabling access to central banking facilities like clearing and liquidity. Exclusion of old entities confirms their legal cessation, requiring lenders to update records and ensure compliance with amalgamated entities for transactions and reporting.
What you must do
- Update internal systems to reflect the 8 new RRBs as scheduled banks for regulatory reporting.
- Remove the 29 erstwhile RRBs from your list of scheduled banks and cease using their identifiers.
- Verify that all transactions and accounts linked to old RRBs are migrated to the corresponding amalgamated banks.
- Inform your operations and compliance teams about these changes to avoid processing errors.
Who it affects
Regional Rural Banks, Sponsor banks of RRBs, Clearing and settlement systems, Regulatory reporting teams
Why were these RRBs included or excluded from the Second Schedule?
The inclusions and exclusions are due to amalgamation of multiple RRBs into larger entities. The 8 new banks are the post-merger entities, while the 29 old ones ceased to exist after the merger.
What is the practical impact of being in the Second Schedule?
Scheduled bank status allows RRBs to access RBI's liquidity facilities, participate in clearing houses, and maintain statutory reserves. Exclusion means the old banks no longer have these privileges.
Do we need to take any action for existing accounts with the excluded RRBs?
Yes, ensure all accounts and transactions are transferred to the corresponding amalgamated bank. Update your systems to reflect the new bank names and codes for compliance.