Parliament passes Regional Rural Banks (Amendment) Bill, 2014

April 28, 2015

Parliament has passed Regional Rural Banks (Amendment) Bill, 2014. It was first passed in Lok Sabha on December 22, 2014 and later in Rajya Sabha on April 28, 2015.
This bill amends Regional Rural Banks Act, 1976 and aims to strengthen the Regional Rural Banks (RRBs) and deepen their financial inclusion.

Key facts about Regional Rural Banks (Amendment) Bill, 2014

Authorised capital: This amendment bill increases the authorised capital of each Regional Rural Bank (RRB) from Rs 5 crore to Rs 2000 crore divided into Rs 200 crore of fully paid share of Rs 10 each.
As per the parent Act the Rs 5 crore share capital of RRBs is split into 5 lakh shares of Rs 100 each.
Issued capital: It also provides that the authorised capital issued by any RRB’s shall not be reduced below Rs 1 crore and shares in all cases to be fully paid up shares of Rs 10 each.
Shareholding: The Bill allows RRBs to raise capital from sources other than the central and state governments, and sponsor banks.
Board of directors: The Bill adds provision that any person who is a director of an RRB is not eligible to be on the Board of Directors of another RRB.
It also mentions that directors will be elected by shareholders based on the total amount of equity share capital issued to such shareholders.
Tenure of directors: The bill raises the tenure of directors to 3 years from existing 2 years. The Bill also states that no director can hold office for a total period exceeding six years.
Closure and balancing of books: The parent Act had provision which mentioned that the balance books of RRBs should be closed and balanced by 31st December every year.
However this amendment bill changes this date to 31st March in order to bring RRB’s balancing of books in uniformity with the financial year.

It should be noted that the parent Act of 1976 mainly has provisions for the incorporation, regulation and winding up of RRBs.

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