What changed
RBI notified the inclusion of 5 amalgamated Regional Rural Banks (Utkal Gramya Bank, Ballia-Etawah Gramin Bank, Allahabad UP Gramin Bank, Maharashtra Gramin Bank, J&K Grameen Bank) in the Second Schedule of the RBI Act, 1934. Simultaneously, 11 erstwhile RRBs (e.g., Bolangir Anchalik Gramya Bank, Ballia Kshetriya Gramin Bank, Marathwada Gramin Bank) were excluded from the same schedule. Both notifications were published in the Extraordinary Gazette of India on June 13, 2011.
What it means for you
For banks, this update clarifies the legal identity of RRBs post-amalgamation, ensuring they are recognized as scheduled banks under the RBI Act. Lenders dealing with these RRBs can now rely on their updated status for regulatory compliance, including CRR/SLR maintenance and access to RBI facilities. It also streamlines the regulatory framework by removing defunct entities.
What you must do
- Update internal records to reflect the new scheduled status of the 5 amalgamated RRBs.
- Remove the 11 erstwhile RRBs from your list of scheduled banks for regulatory reporting.
- Verify counterparty RRB names in transactions to ensure you are dealing with the correct legal entity post-merger.
- Acknowledge receipt of this circular to your respective RBI Regional Office as instructed.
Who it affects
Regional Rural Banks (RRBs), Banks and financial institutions transacting with RRBs, RBI regional offices handling RRB supervision
Why were these RRBs included or excluded from the Second Schedule?
The inclusions and exclusions are a result of amalgamation of RRBs. The 5 new banks are the merged entities, while the 11 excluded banks are the pre-merger entities that ceased to exist.
What is the effective date of these changes?
Both notifications are dated March 31, 2011, and were published in the Extraordinary Gazette on June 13, 2011. The changes are effective from March 31, 2011.
Do I need to take any action if I have existing contracts with the excluded RRBs?
Yes, you should review and update contracts to reference the new amalgamated RRBs as the successor entities, as the old banks are no longer legally recognized.