RRBs Now Eligible to Issue IBPCs on Risk Sharing Basis

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 banks were required to do at the time

• 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