RBI's own words: “in supersession of ... Direction No. FMRD.DIRD.01/14.01.001/2020-21 dated December 04, 2020” — RBI/2021-22/78
Source: Reserve Bank of India · RBI/2020-21/78 · issued 04 Dec 2020 · ~1 min read
Quick answerRBI now permits Regional Rural Banks (RRBs) to borrow and lend in the call/notice/term money market under the same prudential limits as Scheduled Commercial Banks, effective immediately.
The rule, in the simplest words
RRBs can now borrow and lend money in the call/notice/term money market (short‑term market where banks lend or borrow money for a few days to a year).
They can act as both borrowers and lenders, just like scheduled commercial banks.
The limits on how much they can borrow or lend (prudential limits) are the same as those for scheduled commercial banks.
This change is effective immediately, so RRBs must start treating other banks as eligible counterparties right away.
How it plays out — a real example
A regional rural bank officer named Arjun in Lucknow greets a colleague from a scheduled commercial bank and says, ‘We can now borrow the short‑term funds you need for your loan book, just like any other bank.’ He smiles, knowing the new rule lets his RRB manage liquidity more flexibly.
What changed
Previously, RRBs were not allowed to participate in the call/notice/term money market. Now, they can act as both borrowers and lenders in these markets, subject to the same prudential limits and guidelines that apply to Scheduled Commercial Banks under the RBI Master Direction on money market instruments.
What it means for you
This opens a new liquidity management tool for RRBs, allowing them to better manage short-term fund surpluses or deficits. It also increases depth and participation in the money market, potentially improving rate discovery and competition. Banks should note that RRBs will now be direct counterparties in these markets, requiring updated credit and operational assessments.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Update internal policies to treat RRBs as eligible counterparties in call/notice/term money market transactions.
Review and align RRB-specific prudential limits with those applicable to Scheduled Commercial Banks as per the Master Direction.
Ensure compliance teams are aware of the immediate effective date and the contact details for RBI's Financial Market Regulation Department.
Who it affects
Regional Rural Banks (RRBs), Scheduled Commercial Banks, Other eligible market participants in the call/notice/term money market
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
Can RRBs now borrow and lend in the call money market?
Yes, RRBs are permitted to participate both as borrowers and lenders in the call/notice/term money market, effective immediately.
What prudential limits apply to RRBs in this market?
The same prudential limits and guidelines that apply to Scheduled Commercial Banks under the RBI Master Direction on money market instruments, as amended, will apply to RRBs.
Who should RRBs contact for further details?
RRBs may approach the Chief General Manager, Financial Market Regulation Department, RBI Central Office, Mumbai, via email at [email protected].
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
RBI’s words: “in supersession of ... Direction No. FMRD.DIRD.01/14.01.001/2020-21 dated December 04, 2020”
📜 Read the original circular — full text as issued by RBI
RBI/2020-21/78
FMRD.DIRD.01/14.01.001/2020-21
December 04, 2020
All Eligible Market Participants
Madam/Sir,
Regional Rural Banks- Access to Call/Notice/Term Money Market
A reference is invited to the Statement of Developmental and Regulatory Policies dated December 4, 2020 wherein it was announced that Regional Rural Banks (RRBs) shall be permitted to participate in the call/notice/term money market.
2. Accordingly, RRBs shall be permitted to participate in the call/notice and term money markets both as borrowers and lenders. The prudential limits and other guidelines on call/notice/term money markets for the RRBs shall be the same as those applicable to Scheduled Commercial Banks in terms of the RBI Master Direction No.2/2016-17, dated July 7, 2016 on Money Market Instruments: Call/Notice Money Market, Commercial Paper, Certificates of Deposit and Non-Convertible Debentures (original maturity up to one year), as amended from time to time. RRBs may approach the Chief General Manager, Financial Market Regulation Department, Reserve Bank of India Central Office, 9th floor, Central Office building, Shahid Bhagat Singh Marg, Fort, Mumbai-400 001 ( [email protected] ) in this regard.
3. These Directions have been issued by RBI in exercise of the powers conferred under section 45W of the Reserve Bank of India Act, 1934 and of all the powers enabling it in this behalf.
4. These Directions shall be applicable with immediate effect.
Yours faithfully,
(Dimple Bhandia)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2020-21/78 · issued 04 Dec 2020. The plain-English explanation above is BankPulse’s own independent summary.
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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=12006&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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