What changed
RBI notified the inclusion of Baroda UP Bank in the Second Schedule of the RBI Act, 1934, and the exclusion of three erstwhile RRBs: Baroda Uttar Pradesh Gramin Bank, Kashi Gomti Samyut Gramin Bank, and Purvanchal Bank. This change was effected through notification DOR.Rur.S1765/31.04.002/2021-22 dated October 12, 2021, published in the Extraordinary Gazette of India on November 12, 2021, and communicated via RBI circular DOR.Rur.REC.70/31.04.002/2021-22 dated November 22, 2021.
What it means for you
For banks and lenders, this update reflects the ongoing consolidation of Regional Rural Banks, with Baroda UP Bank now recognized as a scheduled bank under the RBI Act. The exclusion of the three erstwhile RRBs means they cease to exist as separate entities, and their operations are merged into the new entity. This impacts regulatory reporting, statutory liquidity requirements, and access to RBI facilities for the merged entities.
What you must do
- Update your internal records to reflect Baroda UP Bank as a scheduled RRB and remove the three excluded RRBs from your counterparty lists.
- Review any outstanding transactions or exposures with the erstwhile RRBs and ensure they are transferred to Baroda UP Bank.
- Communicate the change to relevant departments (e.g., treasury, credit, compliance) to align with RBI's updated schedule.
Who it affects
Regional Rural Banks, Banks with interbank exposures to the affected RRBs, Regulatory compliance teams at banks, Treasury departments managing SLR and CRR obligations
What is the Second Schedule of the RBI Act, 1934?
It is the list of banks recognized as scheduled banks by RBI, which entitles them to certain privileges like access to RBI's lending facilities and participation in the clearing system.
Why were these RRBs excluded and included?
The changes are part of the amalgamation of three erstwhile RRBs into Baroda UP Bank, as per RBI's notification. The exclusion removes the old entities, and inclusion recognizes the new merged bank.
Does this affect customers of the erstwhile RRBs?
Yes, customers of Baroda Uttar Pradesh Gramin Bank, Kashi Gomti Samyut Gramin Bank, and Purvanchal Bank are now served by Baroda UP Bank, which assumes all assets and liabilities.