What changed
Previously, only scheduled commercial banks could issue IBPCs. Now, RRBs are also permitted to issue IBPCs with a tenor of 180 days on risk sharing basis. These IBPCs must be backed by priority sector advances that exceed 60% of the RRB's total outstanding advances.
What it means for you
This expands the pool of IBPC issuers, giving scheduled commercial banks more opportunities to deploy surplus liquidity into priority sector lending via RRBs. For RRBs, it provides a new tool to manage their priority sector excess and raise funds. Banks should update their internal IBPC policies to include RRBs as eligible counterparties.
What you must do
- Update internal IBPC guidelines to include RRBs as eligible issuers for risk-sharing IBPCs.
- Ensure any IBPC purchased from an RRB has a tenor of exactly 180 days and is backed by priority sector advances exceeding 60% of the RRB's outstanding advances.
- Train treasury and credit teams on the new eligibility criteria for IBPCs from RRBs.
- Review existing priority sector lending strategies to leverage IBPCs from RRBs for meeting targets.
Who it affects
All Scheduled Commercial Banks (excluding RRBs & LABs), Regional Rural Banks (RRBs), Treasury departments of banks, Priority sector lending teams
What is the maximum 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 on a non-risk sharing basis?
No, the circular only permits RRBs to issue IBPCs on a risk sharing basis against their priority sector advances in excess of 60% of 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 earlier circular dated December 31, 1988.