What changed
RBI included five amalgamated Regional Rural Banks (Kaveri Grameena Bank, Odisha Gramya Bank, Utkal Grameen Bank, Purvanchal Bank, Vidharbha Konkan Gramin Bank) in the Second Schedule. Simultaneously, 11 erstwhile RRBs were excluded from the Schedule, reflecting their merger into the new entities.
What it means for you
For banks, inclusion in the Second Schedule grants scheduled bank status, enabling access to RBI facilities and regulatory benefits. Excluded banks cease to exist as separate entities, impacting their legal and operational standing. Lenders dealing with these RRBs must update records and ensure compliance with the new structure.
What you must do
- Update internal systems to reflect the five new scheduled RRBs and remove the 11 excluded ones.
- Verify counterparty status for transactions involving these RRBs to avoid regulatory mismatches.
- Communicate changes to relevant departments (credit, treasury, compliance) for seamless operations.
- Acknowledge receipt of this circular to your respective RBI Regional Office.
Who it affects
Regional Rural Banks, Commercial banks dealing with RRBs, Compliance and legal teams at banks, RBI regional offices
What does inclusion in the Second Schedule mean for these RRBs?
It grants them scheduled bank status under the RBI Act, 1934, allowing access to central bank facilities like liquidity support and clearing services.
Why were 11 RRBs excluded simultaneously?
They were the predecessor entities that merged to form the five new RRBs, so their exclusion formalizes the end of their separate legal existence.
Do we need to take any action for past transactions with the excluded RRBs?
Yes, update your records and ensure any ongoing contracts or exposures are transferred to the corresponding new RRB as per the merger scheme.