Home › Circulars › RBI/2009-10/113

RRBs Allowed to Issue IBPCs Against Priority Sector Advances

Current · Source: Reserve Bank of India · RBI/2009-10/113 · issued 04 Aug 2009 · ~2 min read
Quick answerRBI now permits Regional Rural Banks to issue 180-day Inter-Bank Participation Certificates on a risk-sharing basis to scheduled commercial banks, against priority sector advances exceeding 60% of their outstanding advances.
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The rule, in the simplest words
How it plays out — a real example

An agri & priority-sector lending officer in Indore at a Regional Rural Bank sees that 70% of their total loans are to farmers and small businesses (priority sector). They issue a 180-day IBPC to a scheduled commercial bank for the extra 10% above the 60% limit, sharing the risk and getting cash to lend more.

What changed

Earlier, only scheduled commercial banks could issue IBPCs under the scheme introduced in 1988. Now, RRBs are also allowed to issue IBPCs with a tenor of 180 days on a risk-sharing basis, specifically against their priority sector advances that exceed 60% of their total outstanding advances. All other features of the IBPC scheme remain unchanged.

What it means for you

This gives RRBs a new liquidity management tool by allowing them to transfer part of the credit risk on excess priority sector advances to scheduled commercial banks. For banks, it opens an avenue to acquire priority sector exposure through IBPCs, potentially helping them meet priority sector lending targets. The 180-day tenor and risk-sharing nature mean both parties share the credit risk on the underlying advances.

What you must do

Who it affects

Regional Rural Banks (RRBs), Scheduled Commercial Banks (as buyers of IBPCs), Treasury departments of RRBs, Priority sector lending teams

❓ Common questions

What is the minimum tenor for IBPCs issued by RRBs under this circular?

The circular specifies a tenor of 180 days for IBPCs issued by RRBs on a risk-sharing basis.

Can RRBs issue IBPCs against all their advances, or only specific ones?

IBPCs can only be issued against priority sector advances that are in excess of 60% of the RRB's total outstanding advances.

Does this circular change any other features of the IBPC scheme?

No, all other features of the IBPC scheme remain unchanged as per the original circular dated December 31, 1988.

📜 Read the original circular — full text as issued by RBI
RBI/2009-10/113 RPCD.CO.RRB.BC.No.13 /03.05.33/2009-10 August 4, 2009 The Chairman All Regional Rural Banks Dear Sir, Inter-Bank Participations In terms of our Circular DBOD No.BP.BC.57/62-88 dated December 31, 1988 ( copy enclosed ) a scheme of Inter-Bank Participat- ion Certificate (IBPC) was introduced for scheduled commercial banks. 2.   It has been decided that henceforth, Regional Rural Banks (RRBs) can also issue IBPC of a tenor of 180 days on risk sharing basis to scheduled commercial banks against their priority sector advances in excess of 60% of their outstanding advances. 3.   All other features of the scheme of IBPCs will remain unchanged. Yours faithfully, (R.C.Sarangi) Chief General Manager Encl : as above Related Notifications
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-10/113 · issued 04 Aug 2009. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
💻 IT / Systems
  • Train treasury and credit teams on the IBPC scheme mechanics, including risk-sharing terms and reporting requirements.
📜 Compliance
  • Review your RRB's current priority sector advances ratio to identify if you have advances exceeding 60% of outstanding advances that could be securitized via IBPCs.
  • Update internal policies and documentation to enable issuance of 180-day risk-sharing IBPCs to scheduled commercial banks.
  • Coordinate with scheduled commercial banks to explore potential IBPC placements for excess priority sector advances.
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 (RRBs), Scheduled Commercial Banks (as buyers of IBPCs), Treasury departments of RRBs, Priority sector lending teams), your first concrete step on “RRBs Allowed to Issue IBPCs Against Priority Sector Advances” is: “Review your RRB's current priority sector advances ratio to identify if you have advances exceeding 60% of outstanding advances that could be securitized via IBPCs.” (RBI issued this 04 Aug 2009).

  1. Circular: RBI/2009-10/113 -- RRBs Allowed to Issue IBPCs Against Priority Sector Advances
  2. Issued: 04 Aug 2009
  3. Action required: Review your RRB's current priority sector advances ratio to identify if you have advances exceeding 60% of outstanding advances that could be securitized via IBPCs.
  4. Action required: Update internal policies and documentation to enable issuance of 180-day risk-sharing IBPCs to scheduled commercial banks.
  5. Action required: Train treasury and credit teams on the IBPC scheme mechanics, including risk-sharing terms and reporting requirements.
  6. Action required: Coordinate with scheduled commercial banks to explore potential IBPC placements for excess priority sector advances.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. Evidence filed in compliance register on: ____________
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BankPulse Compliance Evidence Pack — generated 03 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=5196&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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