What changed
RBI issued two notifications on July 27, 2020, to include 10 amalgamated RRBs and exclude 21 erstwhile RRBs from the Second Schedule. The changes follow government amalgamation orders for RRBs like Punjab Gramin Bank, Assam Gramin Vikash Bank, and Baroda Gujarat Gramin Bank, among others.
What it means for you
For banks, this update ensures that only legally recognized RRBs are part of the Second Schedule, which is crucial for statutory compliance and access to RBI facilities. Lenders dealing with these RRBs must update their records to reflect the new entities for transactions and regulatory reporting.
What you must do
- Update your internal systems to reflect the new RRB names and exclude the old ones from the Second Schedule list.
- Verify the amalgamation details for each RRB to ensure accurate counterparty identification in transactions.
- Communicate these changes to relevant departments like treasury, compliance, and credit for seamless operations.
- Acknowledge receipt of this circular to your respective RBI Regional Office as instructed.
Who it affects
Regional Rural Banks (RRBs) and their sponsor banks, Banks and financial institutions transacting with RRBs, RBI's Department of Regulation and Compliance teams
Why were these RRBs included or excluded from the Second Schedule?
The changes are due to amalgamations of RRBs as per government notifications under the Regional Rural Banks Act, 1976. The new RRBs replace the old ones, so RBI updates the Second Schedule to reflect the current legal entities.
What is the impact on existing transactions with the old RRBs?
Transactions with the old RRBs should be transitioned to the new amalgamated entities. Banks must ensure that all contracts, accounts, and regulatory filings reference the new RRB names to avoid legal or operational issues.
Do these changes affect the Second Schedule status of other RRBs?
No, only the 10 new RRBs are included and 21 old ones excluded. Other RRBs not mentioned remain unaffected in their Second Schedule status.