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act 021 of 1976 : The Regional Rural Banks Act, 1976

CHAPTER I
CHAPTER II
CHAPTER III
CHAPTER IV
CHAPTER V
CHAPTER VA
CHAPTER VI
Section 1. Short title, extent and commencement.

(1) This Act may be called the Regional Rural Banks Act, 1976.

(2) It extends to the whole of India.
(3) It shall be deemed to have come into force on the 26th day of September, 1975.


Section 2. Definitions.

In this Act, unless the context otherwise requires,--

(a) "Board", in relation to a Regional Rural Bank, means the Board of directors of that Regional Rural Bank;
(b) "Chairman", in relation to a Regional Rural Bank, means the individual appointed or re-appointed under sub-section (1) of section 11 as the Chairman of that bank;
(c) "director", in relation to a Regional Rural Bank, means a member of the Board of that bank; 1
[(ca) "National Bank" means the National Bank for Agriculture and Rural Development established under section 3 of the National Bank for Agriculture and Rural Development Act, 1981 (61 of 1981);]
(d) "notified area" means the local limits, specified under sub-section (1) of section 3, within which a Regional Rural Bank shall operate;
(e) "prescribed" means prescribed by rules made under this Act;
(f) "Regional Rural Bank" means a Regional Rural Bank established under sub-section (1) of section 3;
(g) "Sponsor Bank", in relation to a Regional Rural Bank, means a bank by which such Regional Rural Bank has been sponsored;
(h) "State Government" means,--
(i) in relation to a Regional Rural Bank established in a Union territory, the Central Government;
(ii) in relation to a Regional Rural Bank established in a State, the Government of that State;
(i) words and expressions used herein and not defined but defined in the Reserve Bank of India Act, 1934 (2 of 1934), shall have the meanings respectively assigned to them in that Act;
(j) words and expressions used herein and not defined either in this Act or in the Reserve Bank of India Act, 1934 (2 of 1934), but defined in the Banking Regulation Act, 1949 (10 of 1949), shall have the meanings respectively assigned to them in the Banking Regulation Act, 1949 (10 of 1949).


1 Ins. by Act 1 of 1988, s. 2 (w.e.f. 28-9-1988).

Section 3. Establishment and incorporation of Regional Rural Banks.

(1) The Central Government may, if requested so to do by a Sponsor Bank, by notification in the Official Gazette, establish in a State or Union territory, one or more Regional Rural Banks with such name as may be specified in the notification and may, by the said or subsequent notification, specify the local limits within which each Regional Rural Bank shall operate.

(2) Every Regional Rural Bank shall be a body corporate with perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold and dispose of property and to contract and may sue and be sued in its name.
1 [(3) It shall be the duty of the Sponsor Bank to aid and assist the Regional Rural Bank, sponsored by it, by--
(a) subscribing to the share capital of such Regional Rural Bank;
(b) training personnel of such Regional Rural Bank; and
(c) providing such managerial and financial assistance to such Regional Rural Bank 2 ***, as may be mutually agreed upon between the Sponsor Bank and the Regional Rural Bank:
3 * * * * *]


1. Subs. by Act 1 of 1988, s. 3, for sub-section (3) (w.e.f. 28-9-1988).
2. The words "during the first five years of its functioning" omitted by Act 14 of 2015, s. 2 (w.e.f. 4-2-2016).
3. The proviso omitted by s. 2, ibid. (w.e.f. 4-2-12016).

Section 4. Offices and agencies.

(1) A Regional Rural Bank shall have its head office at such place in the notified area as the Central Government may, after consultation with the 1 [National Bank] and the Sponsor Bank, specify by notification in the Official Gazette.

(2) A Regional Rural Bank may, if it is of opinion that it is necessary so to do, establish its branches or agencies at any place in the notified area.


1. Subs. by Act 1 of 1988, s. 4, for "Reserve Bank" (w.e.f. 28-9-1988).

Section 5. Authorised capital.

The authorised capital of each Regional Rural Bank shall be 1 [two thousand crore of rupees, divided into two hundred crore of fully paid-up shares of ten rupees each]:

Provided that the Central Government may, after consultation with the 2 [National Bank] and the Sponsor Bank, increase or reduce such authorised capital; so, however, that the authorised capital shall not be reduced below 3 [one crore of rupees, and the shares shall be, in all cases, fully paid-up shares of ten rupees each].


1 Subs. by Act 14 of 2015, s. 3, for "five crores of rupees divided into five lakhs of fully paid-up shares of one hundred rupees each" (w.e.f. 4-2-2016).
2 Subs. by Act 1 of 1988, s. 5, for "Reserve Bank" (w.e.f. 28-9-1988).
3 Subs. by Act 14 of 2015, s. 3, for "twenty-five lakhs of rupees, and the shares shall be, in all cases, fully paid-up shares of one hundred rupees each" (w.e.f. 4-2-2016).

Section 6. Issued capital.

1 [(1) The issued capital of each Regional Rural Bank shall, in the first instance, be such as may be fixed by the Central Government in this behalf, but it shall in no case be less than 2 [one 2 [one crore of rupees].]

(2) Of the capital issued by a Regional Rural Bank under sub-section (1), fifty per cent. shall be subscribed by the Central Government; fifteen per cent. by the concerned State Government and thirty-five per cent. by the Sponsor Bank.
3[Provided that in case the Regional Rural Bank raises its capital from sources other than the Central Government or the State Government or the Sponsor Bank, the shareholding of the Central Government and the Sponsor Bank shall not be less than fifty-one per cent.:
Provided further that the Central Government shall consult the concerned State Government if the level of shareholding in the Regional Rural Bank of such State Government is reduced below fifteen per cent.]
4 [(2A) The Central Government may, in consultation with the Sponsor Bank and the State Government, by notification, either raise or reduce the limit of shareholding of the Central Government, the State Government or the Sponsor Bank specified in sub-section (2):
Provided that the Central Government shall consult the concerned State Government before reducing the limit of shareholding of such State Government.]
(3) The Board may, after consultation with the 5 [National Bank], the concerned State Government and the Sponsor Bank and with the prior approval of the Central Government, from time to time, increase the issued capital of the Regional Rural Bank; and, where additional capital is issued, such capital shall also be subscribed in the same proportion as is specified in sub-section (2) 4 [or, as the case may be, notified by the Central Government under sub-section (2A)].


1. Subs. by Act 1 of 1988, s. 6, for sub-section (1) (w.e.f. 28-9-1988).
2. Subs. by Act 14 of 2015, s. 4, for "“twenty-five lakhs of rupees or exceed one crore of rupees" (w.e.f. 4-2-2016).
. Ins. by s. 4, ibid. (w.e.f. 4-2-2016).
4. Ins. by Act 14 of 2015, s. 4 (w.e.f. 4-2-2016).
5. Subs. by Act 1 of 1988, s. 6, for "Reserve Bank" (w.e.f. 28-9-1988).

Section 7. Shares to be approved securities.

Notwithstanding anything contained in the Acts hereinafter mentioned in this section, the shares of a Regional Rural Bank shall be deemed to be included among the securities enumerated in section 20 of the Indian Trusts Act, 1882 (2 of 1882), and shall also be deemed to be approved securities for the purposes of the Banking Regulation Act, 1949 (10 of 1949).



Section 8. Management.

(1) Subject to the provisions of this Act, the general superintendence, direction and management of the affairs and business of a Regional Rural Bank shall vest in a Board of directors who may exercise all the powers and discharge all the functions which may be exercised or discharged by the Regional Rural Bank.
(2) In discharging its functions, the Board shall act on business principles and shall have due regard to public interest.


Section 9. Board of directors.

(1) The Board of directors shall consist of the Chairman appointed under sub-section (1) of section 11, and the following other members, namely:--

1 [(a) two directors, who are not officers of the Central Government, State Government, Reserve Bank, National Bank, Sponsor Bank or any other bank, to be nominated by the Central Government;
2 [Provided that no person shall be nominated as a director, if he is already a director on the Board Board of any other Regional Rural Bank;]
(b) one director, who is an officer of the Reserve Bank, to be nominated by that Bank;
(c) one director, who is an officer of the National Bank, to be nominated by that Bank;
(d) two directors, who are officers of the Sponsor Bank, to be nominated by that Bank; and
(e) two directors, who are officers of the concerned State Government, to be nominated by that Government:]
2 [(f) such number of directors elected by the shareholders other than the directors nominated by the Central Government, the State Government, the Sponsor Bank and other institutions owned or controlled by the Central Government or the State Government, whose names are entered in the register of shareholders of the Regional Rural Bank at least ninety days before the date of the meeting in which the election of directors takes place on the following basis, namely:--
(i) where the total amount of equity share capital issued to such shareholders is ten per cent. or less of the total issued equity capital, one director shall be elected from such shareholders;
(ii) where the total amount of equity share capital issued to such shareholders is more than ten per cent. but less than twenty-five per cent. of the total issued equity capital, two directors shall be elected from the shareholders including the shareholders referred to in sub-clause (i);
(iii) where the total amount of equity share capital issued to such shareholders is twenty-five per cent. or more of the total issued equity capital, three directors shall be elected from the shareholders including shareholders referred to in sub-clauses (i) and (ii).]
(2) The Central Government may increase the number of members of the Board; so, however, that the number of directors does not exceed fifteen in the aggregate and also prescribe the manner in which the additional number may be filled in.
3 [(3) The Central Government may appoint an officer of the Central Government on the Board of Regional Rural Banks, if it considers necessary for the purposes of effective functioning of the Regional Rural Banks.]


1 Subs. by s. 7, ibid., for clauses (a), (b) and (c) (w.e.f. 28-9-1988).
2 Ins. by Act 14 of 2015, s. 5 (w.e.f. 4-2-2016).
3 Ins. by Act 14 of 2015, s. 5 (w.e.f. 4-2-2016).

Section 10. Term of office of director.

1 [10. Term of office of director.--A director nominated under clause (a) of sub-section (1) of section 9 shall hold office during the pleasure of the Central Government and for such term, not exceeding three years, from the date on which he assumes his office, as the Central Government may specify at the time of his nomination and shall be eligible for renomination:

Provided that no such director shall hold office either continuously or intermittently for a period exceeding six years.]


1. Subs. by s. 6, ibid., for section 10 (w.e.f. 4-2-2016).

Section 11. Chairman.

(1) 1 [The Sponsor Bank] shall appoint an individual to be the Chairman of a Regional Rural Bank and specify the period, not exceeding five years, for which such individual shall, subject to the provisions of sub-section (4), hold office as the Chairman:

2 [Provided that no appointment of such an individual shall be made,--
(a) if such an individual is an officer of the Sponsor Bank, except after consultation with the National Bank;
(b) in any other case, except with the prior approval of the Central Government.]
3 [(1A) Notwithstanding anything contained in sub-section (1),--
(a) the Sponsor Bank shall have the right to terminate the term of office of the Chairman at any time before the expiry of the period specified in sub-section (1):
Provided that no such termination shall be made,--
(a) if the Chairman is an officer of the Sponsor Bank, except after consultation with the National Bank; and
(b) in any other case, except with the prior approval of the Central Government:
Provided further that where the Chairman is not an officer of the Central Government, State Government, Reserve Bank, National Bank, Sponsor Bank or any other bank, he shall be given notice of not less than three months in writing or three months' salary and allowances in lieu of such notice; and
(b) the Chairman shall have the right to resign his office at any time before the expiry of the period specified in sub-section (1) by giving to the Sponsor Bank, notice of not less than three months in writing.]
(2) The individual, appointed as a Chairman under sub-section (1), shall, on the expiry of the period specified under that sub-section, be eligible for re-appointment.
(3) The Chairman shall devote his whole time to the affairs of the Regional Rural Bank and shall have, subject to the superintendence, control and direction of the Board, the management of the whole of the affairs of the Regional Rural Bank.
4 [(4) 5 [The Sponsor Bank] may, at any time, remove the Chairman from office:
6 [Provided that no such removal shall be made,--
(a) if the Chairman is an officer of the Sponsor Bank, except after consultation with the National Bank; and
(b) in any other case, except with the prior approval of the Central Government:
Provided further that] no person shall be removed from his office, under this sub-section, unless he has been given an opportunity of showing cause against his removal.]
(5) The Chairman shall receive such salary and allowances and be governed by such terms and conditions of service as may be determined by the 7 [the Sponsor Bank in consultation with the National Bank].
(6) If the Chairman is, by infirmity or otherwise, rendered incapable of carrying out his duties or is absent, on leave or otherwise, in circumstances not involving the vacation of office, the Central Government may appoint another individual to act as the Chairman during the absence of the first-mentioned Chairman


1. Subs. by Act 1 of 1988, s. 8, for "The Central Government" (w.e.f. 28-9-1988). 2. Proviso ins. by s. 8, ibid. (w.e.f. 28-9-1988). 3. Subs. by s. 8, ibid., for sub-section (1A) (w.e.f. 28-9-1988).
4. Subs. by Act 73 of 1976, s. 6, for sub-section (4) (w.e.f. 11-6-1976).
5. Subs. by Act 1 of 1988, s. 8, for "The Central Government" (w.e.f. 28-9-1988).
6. Subs. by s. 8, ibid., for "Provided that" (w.e.f. 28-9-1988).
7. Subs. by s. 8, ibid., for "the Central Government" (w.e.f. 28-9-1988).

Section 12. Disqualifications.

A person shall be disqualified for being appointed or, as the case may be, nominated as, and for being, a director, if he--

(a) is, or, at any time has been, adjudged insolvent or has suspended payment of his debt or has compounded with his creditors, or
(b) is of unsound mind and stands so declared by a competent court, or
(c) is, or has been, convicted of an offence which, in the opinion of the Central Government, involves moral turpitude.


Section 13. Vacation of the seat of directors.

(1) If a director--

(a) becomes subject to any disqualification specified in section 12, or
(b) is absent without leave of the Board for more than three consecutive meetings thereof,
his seat shall thereupon become vacant.
1 [(2) A director may resign his office by giving notice thereof in writing to the authority by which he was nominated; and, on such resignation being accepted, the director shall be deemed to have vacated his office.]


1 Subs. by s. 9, ibid., for sub-section (2) (w.e.f. 28-9-1988).

Section 14. Meetings of Board.

(1) The Board of directors of a Regional Rural Bank shall meet at such time and place and shall observe such rules of procedure in regard to the transaction of business at its meetings as may be prescribed.

(2) The Chairman of the Regional Rural Bank shall preside over every meeting of the Board, and, in his absence, such director as the Chairman may generally, or in relation to any particular meeting, authorise in this behalf shall preside; and, in the absence of both the Chairman and the director so authorised, the directors present at the meeting shall elect one from among themselves to preside over the meeting.
Explanation.--For the purposes of this sub-section, "absence" from a meeting means non-attendance for any reason whatsoever at the meeting, or any part of the meeting during which any business is transacted.
(3) All questions at a meeting of the Board shall be decided by a majority of the votes of the directors present and voting; and, in case of equality of votes, the person presiding shall have a second or casting vote.
(4) No director shall, as a director, take part in the discussion of, or vote on, any contract, loan, arrangement or proposal entered into or to be entered into, by or on behalf of the Regional Rural Bank, if he is, in any way, whether directly or indirectly, interested in the contract, loan, arrangement or proposal and, where a director is interested in any such matter, he shall, at the earliest possible opportunity, disclose to the Board the nature of his interest in such contract, loan, arrangement or proposal, and where he does so, his presence at the meeting shall not count for the purpose of forming any quorum at the time of any such discussion or vote, and if he does vote, his vote shall be void:
Provided that nothing contained in this sub-section shall apply to such director by reason only of his being--
(i) a shareholder (other than a director) holding not more than two per cent. of the paid-up capital in any public company within the meaning of the Companies Act, 1956 (1 of 1956), or any corporation established by or under any law for the time being in force in India or any co-operative society, with which the Regional Rural Bank has entered into, or proposes to enter into, any contract, loan, arrangement or proposal; or
(ii) a director of the Regional Rural Bank as such.


Section 15. Committees of Board.

The Board may constitute such committees, whether consisting wholly of directors or wholly of other persons or partly of directors and partly of other persons, as it may think fit, for such purposes as it may decide.



Section 16. Fees and allowances of directors and members of committees.

(1) Every director and every member of a committee (other than the Chairman) shall be paid such fees and allowances as may be determined by the Central Government:

Provided that no fees shall be paid to any director, or member of a committee, if he is an officer of the Central Government, State Government, the Reserve Bank, 1 [National Bank,] Sponsor Bank or any other bank.
(2) The allowances payable to a director or a member of a committee, who is an officer of the Central Government, State Government, Reserve Bank, 1 [National Bank,] Sponsor Bank or any other bank, shall be paid by the Government or bank by which such officer is employed; and the allowances and fees payable to any other director or member of a committee shall be payable by the concerned Regional Rural Bank.


1 Ins. by Act 1 of 1988, s. 10 (w.e.f. 28-9-1988).

Section 17. Staff of Regional Rural Banks.

(1) A Regional Rural Bank may appoint such number of officers and other employees as it may consider necessary or desirable 1 [in such manner as may be prescribed] for the efficient performance of its functions and may determine the terms and conditions of their appointment and service:

Provided that it shall be lawful for a Sponsor Bank, if requested so to do by a Regional Rural Bank sponsored by it, to send, 2 *** such number of officers or other employees on deputation to the Regional Rural Bank as may be necessary or desirable for the efficient performance of its functions:
Provided further that the remuneration of officers and other employees appointed by a Regional Rural Bank shall be such as may be determined by the Central Government, and, in determining such remuneration, the Central Government shall have due regard to the salary structure of the employees of the State Government and the local authorities of comparable level and status in the notified area.
(2) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947), or any other law for the time being in force, no award, judgment, decree, decision or order of any industrial tribunal, court or other authority, made before the commencement of this Act, shall apply to the terms and conditions in relation to the persons appointed by a Regional Rural Bank.
(3) The officers and other employees of a Regional Rural Bank shall exercise such powers and perform such duties as may be entrusted or delegated to them by the Board.



1. Ins. by s. 11, ibid. (w.e.f. 28-9-1988).
2. The words ", during the first five years of the functioning of a Regional Rural Bank," omitted by s. 11, ibid. (w.e.f. 28-9-1988).

Section 18. Business which a Regional Rural Bank may transact.

(1) Every Regional Rural Bank shall carry on and transact the business of banking as defined in clause (b) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), and may engage in one or more forms of business specified in sub-section (1) of section 6 of that Act.

(2) Without prejudice to the generality of the provisions of sub-section (1), every Regional Rural Bank may, in particular, undertake the following types of business, namely:--
(a) the granting of loans and advances, particularly to small and marginal farmers and agricultural labourers, whether individually or in groups, and to co-operative societies, including agricultural marketing societies, agricultural processing societies, co-operative farming societies, primary agricultural credit societies or farmers service societies, for agricultural purposes or agricultural operations or for other purposes connected therewith;
(b) the granting of loans and advances, particularly to artisans, small entrepreneurs and persons of small means engaged in trade, commerce or industry or other productive activities, within the notified area in relation to the Regional Rural Bank.


Section 19. Closure of accounts.

(1) Every Regional Rural Bank shall cause its books to be closed and balanced as on the 1 [31st day of March] 2 [or such other date in each year as the Central Government may, by notification in the Official Gazette, specify] and shall appoint with the approval of the Central Government auditors for the audit of its accounts:

3 [Provided that with a view to facilitating the transition from one period of accounting to another period of accounting under this sub-section, the Central Government may, by order published in the Official Gazette, make such provisions as it considers necessary or expedient for the closing and balancing of, or for other matters relating to, the books in respect of the concerned years.]
(2) Every auditor of a Regional Rural Bank shall be a person who is qualified to act as an auditor of a company under section 226 of the Companies Act, 1956 (1 of 1956), and shall receive such remuneration as the Regional Rural Bank may fix with the approval of the Central Government.
(3) Every auditor shall be supplied with a copy of the annual balance-sheet and profit and loss account of the Regional Rural Bank, and a list of all books kept by the Regional Rural Bank, and it shall be the duty of the auditor to examine the balance-sheet and vouchers relating thereto, and, in the performance of his duties, the auditor--
(a) shall have, at all reasonable times, access to the books, accounts and other documents of the Regional Rural Bank;
(b) may, at the expense of the Regional Rural Bank, employ accountants or other persons to assist him in investigating such accounts; and
(c) may, in relation to such accounts, examine the Chairman or any officer or employee of the Regional Rural Bank.
(4) Every auditor of a Regional Rural Bank shall make a report to that bank upon the annual balance-sheet and accounts and in every such report shall state,--
(a) whether, in his opinion, the balance-sheet is a full and fair balance-sheet containing all necessary particulars and is properly drawn up so as to exhibit a true and fair view of the affairs of the Regional Rural Bank, and, in case he had called for any explanation or information, whether it has been given and whether it is satisfactory;
(b) whether or not, the transactions of the Regional Rural Bank, which have come to his notice, have been within the powers of that bank;
(c) whether or not, the returns received from the offices and branches of the Regional Rural Bank have been found adequate for the purpose of his audit;
(d) whether the profit and loss account shows a true balance of profit or loss for the period covered by such accounts; and
(e) any other matter which he considers should be brought to the notice of the Regional Rural Bank.


1. Subs. by Act 14 of 2015, s. 7, for "31st day of December" (w.e.f. 4-2-2016).
2. Subs. by Act 66 of 1988, s. 33, for "of each year" (w.e.f. 30-12-1988).
3. Ins. by s. 33, ibid. (w.e.f. 30-12-1988).

Section 20. Annual report to be furnished to the shareholders.

1 [(1)] Every Regional Rural Bank shall, within 2 [three months from the date of the closure of its accounting year, or such further period, not exceeding three months, as may be permitted by the Reserve Bank], send to each of its shareholders a report as to its working and activities during the accounting year immediately preceding together with a copy of its balance-sheet, profit and loss account and the auditor’s report in relation to the accounts of the said accounting year.

3 [(2) The Central Government shall cause every auditor’s report and report on the working and activities of each Regional Rural Bank to be laid, as soon as may be after they are received, before each House of Parliament.]


1. S. 20 renumbered as sub-section (1) thereof by Act 81 of 1985, s. 11 (w.e.f. 1-5-1986).
2. Subs. by Act 1 of 1988, s. 12, for "sixty days from the date of closure of its accounting year" (w.e.f. 28-9-1988).
3. Ins. by Act 81 of 1985, s. 11 (w.e.f. 1-5-1986).

Section 21. Disposal of profits.

After making provisions for bad and doubtful debts, depreciation in assets, contributions to staff and superannuation funds and all other matters for which provision is, under law, necessary or which are usually provided for by banking companies, a Regional Rural Bank may, out of its net profits, declare a dividend.



Section 22. Regional Rural Bank to be deemed to be a co-operative society for purpose of the Income-tax Act, 1961.

For the purpose of the Income-tax Act, 1961 (43 of 1961), or any other enactment for the time being in force relating to any tax on income, profits or gains, a Regional Rural Bank shall be deemed to be a co-operative society.



Section 23. Interest-tax not payable.

Notwithstanding anything contained in the Interest-tax Act, 1974 (45 of 1974), no Regional Rural Bank shall be liable to pay any tax under that Act.



Section 23A. Amalgamation of Regional Rural Banks.

1[23A. Amalgamation of Regional Rural Banks.--(1) Notwithstanding anything contained in this Act, if the Central Government, after consultation with the National Bank, the concerned State Government and the Sponsor Bank, is of the opinion that it is necessary in the public interest or in the interest of the development of the area served by any Regional Rural Bank or in the interest of the Regional Rural Banks themselves, that two or more Regional Rural Banks should be amalgamated, that Government may, by notification in the Official Gazette, provide for the amalgamation of such Regional Rural Banks (hereafter in this Chapter referred to as the transferor Regional Rural Banks) into a single Regional Rural Bank (hereafter in this Chapter referred to as the transferee Regional Rural Bank) with such constitution, property, powers, rights, interests, authorities and privileges; and with such liabilities, duties and obligations, as may be specified in the notification.

(2) Every notification issued under sub-section (1) shall indicate the date with effect from which the amalgamation shall become effective.
(3) Every notification issued under sub-section (1) may also provide for all or any of the following matters, namely:--
(a) the continuance in service of all the employees of the transferor Regional Rural Banks (excepting such of them as not being workmen with the meaning of the Industrial Disputes Act, 1947 (14 of 1947) are specifically mentioned in the notification) in the transferee Regional Rural Bank at the same remuneration and on the same terms and conditions of service, which they were getting or, as the case may be, by which they were being governed, immediately before the date on which the amalgamation takes effect;
(b) notwithstanding anything contained in clause (a), where any of the employees of the transferor Regional Rural Banks, not being workmen within the meaning of the Industrial Disputes Act, 1947 (14 of 1947) are specifically mentioned in the notification, or where any employee of the transferor Regional Rural Banks has by notice in writing given to the transferee Regional Rural Bank at any time before the expiry of a period of three months next following the date on which the amalgamation takes effect, intimated his intention of not becoming an employee of the transferee Regional Rural Bank, the payment to such employee of compensation, if any, to which he is entitled under the Industrial Disputes Act, 1947, and such gratuity, provident fund and other retirement benefits ordinarily admissible to him under the rules or authorisations of the concerned transferor Regional Rural Banks immediately before that date;
(c) the other terms and conditions for the amalgamation of Regional Rural Banks; and
(d) the continuance by or against the transferee Regional Rural Bank of any pending legal proceeding by or against any transferor Regional Rural Banks and such consequential, incidental and supplemental provisions, as may, in the opinion of the Central Government, be necessary to give effect to the amalgamation.
(4) Every notification issued under sub-section (1) shall, as soon as may be after it has been made, be laid before each House of Parliament.


1. Ins. by Act 1 of 1988, s. 13 (w.e.f. 28-9-1988).

Section 23B. Notification under section 23A to be sufficient notice to concerned parties.

1[23B. Notification under section 23A to be sufficient notice to concerned parties.--(1) A notification issued under sub-section (1) of section 23A, shall constitute sufficient notice of the provisions thereof to all the parties concerned and shall be binding on the transferor Regional Rural Banks and the transferee Regional Rural Bank and to the depositors, creditors, employees and all other persons having dealings with such banks.

(2) Notwithstanding anything contained in the Transfer of Property Act, 1882 (4 of 1882) or the Registration Act, 1908 (16 of 1908), any notification issued under sub-section (1) of section 23A shall be sufficient conveyance, in accordance with the provisions of the notification, of the business, properties, assets and liabilities, rights, interests, powers, privileges, benefits and obligations of whatever nature of the transferor Regional Rural Banks to the transferee Regional Rural Bank.
(3) On and from the date on which the amalgamation takes effect under section 23A, any reference to the transferor Regional Rural Banks in any agreement, conveyance, assurance, power of attorney or any other document of whatsoever nature, shall be deemed to be a reference to the transferee Regional Rural Bank and the rights and obligations of the transferor Regional Rural Banks shall be deemed to be the rights and obligations of the transferee Regional Rural Bank to the extent specified in the said amalgamation.]


1. Ins. by Act 1 of 1988, s. 13 (w.e.f. 28-9-1988).

Section 23C. Cessation of business of transferor Regional Rural Banks.

1[23C. Cessation of business of transferor Regional Rural Banks.--On and from the date on which the amalgamation takes effect under section 23A, the transferor Regional Rural Banks shall cease to carry on business, including that of making of any payment to any depositors or discharge any liability or obligation to the creditors except to the extent as may be necessary for the implementation of the provisions of the said amalgamation.]



1. Ins. by Act 1 of 1988, s. 13 (w.e.f. 28-9-1988).

Section 23D. Liquidation of Regional Rural Banks.

1[23D. Liquidation of Regional Rural Banks.--Where a notification is issued for the amalgamation of Regional Rural Banks under sub-section (1) of section 23A, the Central Government may, by a further notification in the Official Gazette, direct that on such date, as may be specified therein, the transferor Regional Rural Banks, which by reason of amalgamation will cease to function, shall stand dissolved and such direction shall take effect notwithstanding anything to the contrary contained in section 26.]



1. Ins. by Act 1 of 1988, s. 13 (w.e.f. 28-9-1988).

Section 24. Power of Central Government to give directions.

(1) A Regional Rural Bank shall, in the discharge of its functions, be guided by such directions in regard to matters of policy involving public interest as the Central Government may, after consultation with the Reserve Bank, give.

(2) If any question arises as to whether any such direction relates to a matter of policy involving public interest, the decision of the Central Government thereon shall be final.


Section 24A. Inspection, audit and scrutiny by the Sponsor Bank.

1 [24A. Inspection, audit and scrutiny by the Sponsor Bank.--Notwithstanding anything contained in section 19 and without prejudice to the provisions of section 35 of the Banking Regulation Act, 1949 (10 of 1949), the Sponsor Bank shall, from time to time, monitor the progress of the Regional Rural Banks sponsored by it and cause inspection, internal audit and scrutiny to be made by one or more of its officers and suggest corrective measures to be taken by such Regional Rural Bank.]



1 Ins. by Act 1 of 1988, s. 14 (w.e.f. 28-9-1988).

Section 25. Obligations as to fidelity and secrecy.

(1) A Regional Rural Bank shall observe, except as otherwise required by law, the practices and usages customary among bankers and, in particular, it shall not divulge any information relating to, or to the affairs of, its constituents except in circumstances in which it is, in accordance with the law or practice and usage customary among bankers, necessary or appropriate for the Regional Rural Bank to divulge.

(2) Every director, member of a committee or auditor, officer or other employee of a Regional Rural Bank shall, before entering upon his duties, make a declaration of fidelity and secrecy in the form set out in the Schedule to this Act;
1 [(3) Nothing contained in this section shall apply to the credit information disclosed under the Credit Information Companies (Regulation) Act, 2005 (30 of 2005).]


1 Ins. by Act 30 of 2005, s. 2 and the Schedule (w.e.f. 23-6-2005).

Section 26. Bar to liquidation of Regional Rural Bank.

No provision of law relating to the winding up of companies shall apply to a Regional Rural Bank and a Regional Rural Bank shall not be placed in liquidation save by order of the Central Government and in such manner as it may direct.



Section 27. Defects in appointment or constitution not to invalidate acts or proceedings.

(1) No act of a Chairman, acting in good faith, shall be invalid merely by reason of any defect in his appointment or in the procedure.

(2) No act or proceeding of any Board of directors or of any committee of a Regional Rural Bank shall be invalid merely on the ground of the existence of any vacancy in, or defect in the constitution of, such Board or committee, as the case may be.
(3) Acts done by a person, acting in good faith, as a director or member of a committee of a Regional Rural Bank shall be valid, notwithstanding that it may afterwards be discovered that his appointment was invalid by reason of any defect or disqualification or had terminated by virtue of any provision contained in any law for the time being in force:
Provided that nothing in this section shall be deemed to give validity to any act done by a director or a member of any committee of a Regional Rural Bank after his appointment has been shown to the Regional Rural Bank to be invalid or to have terminated.


Section 28. Indemnity of directors, etc.

(1) A director or a member of a committee of a Regional Rural Bank shall not be responsible for any loss or expense caused to such bank by insufficiency or deficiency of the value of, or title to, any property or security acquired or taken on behalf of a Regional Rural Bank or by the insolvency or wrongful act of any customer or debtor or anything done in, or in relation to, the execution of the duties of his office, unless such loss, expense, insufficiency or deficiency was due to any wilful act or default on the part of such director or member.

(2) The Chairman of a Regional Rural Bank and every officer of the Central Government or State Government or an officer of the Reserve Bank 1 [or the National Bank] or the Sponsor Bank and every officer or other employee of a Regional Rural Bank shall be indemnified by such bank against all losses and expenses incurred by him in, or in relation to, the discharge of his duties except such as have been caused by his own wilful act or default.


1 Ins. by Act 1 of 1988, s. 15 (w.e.f. 28-9-1988).

Section 29. Power to make rules.

(1) The Central Government may, after consultation with the 1 [National Bank] and the Sponsor Bank, by notification in the Official Gazette, make rules for carrying out the provisions of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:
(a) the manner in which the additional number of members of the Board may be filled in, under sub-section (2) of section 9;
(b) the time and place at which the Board of directors of a Regional Rural Bank shall meet and the rules of procedure which shall be observed by the Board in regard to the transaction of business at its meetings, under sub-section (1) of section 14;
2 [(ba) the manner in which the officers and other employees of the Regional Rural Banks shall be appointed;]
(c) any other matter which is required to be, or may be, prescribed.
(3) Every rule made by the Central Government under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.


1 Subs. by s. 16, ibid., for "Reserve Bank" (w.e.f. 28-9-1988).
2 Ins. by s. 16, ibid. (w.e.f. 28-9-1988).

Year Description Hindi Description Files(Eng) Files(Hindi)
13-07-2010 rrb appointments and promotions of officers and employees rules 2010
12-12-2011 RRB Appointment and promotion of Officers and Employees Amendment Rules, 2011
29-03-2017 Regional Rural Banks (Appointment of Officers and Employees) Rules, 2017
23-08-2017 Regional Rural Banks(Appointment of Officers and Employees) Amendment Rules, 2017
Section 30. Power to make regulations.

1 [(1)] The Board of directors of a Regional Rural Bank may, after consultation with the Sponsor Bank and the 2 [National Bank], and with the previous sanction of the Central Government, 3 [by notification in the Official Gazette,] make regulations, not inconsistent with the provisions of this Act and the rules made thereunder, to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of this Act.

4 [(2) Every regulation shall, as soon as may be after it is made under this Act by the Board of directors, be forwarded to the Central Government and that Government shall cause a copy of the same to be laid before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the regulation or both Houses agree that the regulation should not be made, the regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that regulation.]



1. Section 30 renumbered as sub-section (1) thereof by Act 1 of 1984, s. 70 (w.e.f. 15-2-1984).
2. Subs. by Act 1 of 1988, s. 17, for "Reserve Bank" (w.e.f. 28-9-1988).
3. Ins. by Act 66 of 1988, s. 34 (w.e.f. 30-12-1988).
4. Ins. by Act 1 of 1984, s. 70 (w.e.f. 15-2-1984).

Section 31. Removal of difficulties.

If any difficulty arises in giving effect to the provisions of this Act, the Central Government may make such order, not inconsistent with the provisions of this Act, as may appear to it to be necessary for the purpose of removing the difficulty:

Provided that no such order shall be made after the expiry of a period of five years from the commencement of this Act.


Section 32. Act to override the provisions of other laws.

The provisions of this Act shall have effect notwithstanding anything to the contrary contained in any other law for the time being in force or in any contract, express or implied, or in any instrument having effect by virtue of any law other than this Act, and notwithstanding any custom or usage to the contrary.



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