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RRBs allowed to participate in consortium lending & open back offices-June 2007

With a view to providing more business avenues and opportunities to Regional rural banks (RRBs) for lending, Reserve Bank has permited them to participate in consortium lending, within the extant exposure limits, with their sponsor banks as also with other public sector banks and developmental financial institutions (DFIs).

However, this is subject to the condition that the project to be financed is in the area of operation of the RRB concerned and guidance and appraisal of the project is provided by their sponsor bank.

2. RBI has also allowed RRBs to set up Service Branches / Central Processing Centres (CPCs) / Back Offices exclusively to attend to back office functions such as data processing, verification and processing of documents, issuance of cheque books, demand drafts etc. and other functions incidental to their banking business.

However, these offices should have no interface with customers and would not be allowed to be converted into General Banking branches. These offices would be treated on par with a branch and the RRBs shall be required to obtain necessary licence from the concerned Regional Office of RBI (RPCD).

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