REGIONAL RURAL BANKS ACT, 1976
(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.
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-secti
(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;
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(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.
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1. Subs. by Act 1 of 1988, sec. 4, for “Reserve Bank” (w.e.f. 28-9-1988).
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The authorised capital of each Regional Rural Bank shall be 1[Five Crores of rupees divided into five lakhs] of fully paid-up shares of one hundred 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 twenty-five lakhs of rupees, and the shares shall be in all cases, fully paid-up shares of one hundred rupees each.
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1. Subs. by Act 1 of 1988, sec. 5, for “one crore of rupees, divided into one lakh” (w.e.f. 28-9-1988).
2. Subs. by Act 1 of 1988, sec. 5, for “Reserve Bank” (w.e.f. 28-9-1988).
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[(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 twenty-five lakhs of rupees or exceed 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) The Board may, after consultation with the 2[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 i
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)."
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.
i. The Board of directors shall consist of the Chairman appointed under sub-section (1) of section 11, and the following other members, namely:--
a. Not more than three directors, to be nominated by the Central Government;
b. Not more than two directors, to be nominated by the concerned
(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;
(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 th
A director (other than the Chairman) shall hold office for such period not exceeding two years, from the date when he assumes office, as the authority nominating him may specify at the time when the nomination is made, and may, on the expiry of the said period, continue to hold office until his successor has been nominated and shall also be eligible for re-nomination."
(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; and
(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
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.
(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.]
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1. Subs. by Act 1 of 1988, sec. 9, for sub-section (2) (w.e.f. 28-9-1988).
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(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.
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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 purpose as it may decide."
(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 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.
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(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 salar
(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 agricultura
(1) Every Regional Rural Bank shall cause its books to be closed and balanced as on the 31st day of December 1[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\:"
2[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
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 recovered, before each House of Parliament.]
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1. Secti
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. "
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."
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."
(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.
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(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, 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.
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* Section 23C ins. by Act 1 of 1988, sec. 13 (w.e.f. 28-9-1988).
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.
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* Section 23D ins. by Act 1 of 1988, sec. 13 (w.e.f. 28-9-1988).
(1) 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.
Notwith-standing 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.]
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1. Ins. by Act 1 of 1988, sec. 14 (w.e.f. 28-9-1988).
(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, 2004.]
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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."
(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 va
(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 of 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 re
(1) The Central Government may, after consultation with the 2[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 w
[(1)] The Board of directors of a Regional Rural Bank may, after consultation with the Sponsor Bank and the 5[National Bank] and with the previous sanction of the Central Government, 6[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 for 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
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.
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."
The Schedule
[See section 25 (2)]
I,......................................................................., do hereby, declare that I will faithfully, truly and to the best of my skill and ability execute and perform the duties required of me as a director, member of a committee, officer, employee or auditor (as the case may be) of the Regional Rural Bank and which properly relate to any office or position in the said Bank held by me.
I further declare that I will not communicate or allow to be communicated to any person not legally entitled thereto any information relating to the affairs of the Regional Rural Bank or to the affairs of any person having any dealings with the Regional Rural Bank, nor will I allow any such person to inspect or have ac
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