Rural Banks (RRBs) were prohibited from offering their clients internet banking services. It has been decided to give RRBs permission to offer their customers the option of internet banking in an effort to improve customer service and take into account the demand for such services.
The eligibility requirements for Regional Rural Banks to offer Internet Banking with a transactional facilities to their customers have been revised in light of the need to promote the spread of digital banking for customers in rural areas.
The following requirements should be met by RRBs who want to offer their customers internet banking services:
- The bank should formulate a policy for Internet Banking with the approval of the Board.
- The policy should fit into the overall Information technology of the Bank and Information Security Policy and ensures confidentiality of records and security systems.
- The policy should clearly lay down the procedure to be followed in respect of 'Know Your Customer' requirements.
- The policy should cover technology and security standards and also address the legal, regulatory and supervisory issues as enumerated in this Annex.
- The bank should put in place sound internal control systems and take into account the operational risks involved in providing the service.
- Adequate disclosure should be made regarding the risk, responsibilities and liabilities to the customers before offering the facility.
The revised eligibility criteria to seek approval for providing Internet Banking with transactional facility by RRBs to their customers are as under:
- Full implementation of Core Banking Solutions (CBS) and migration to IPv6.
- Compliance with minimum prescribed CRAR requirement as applicable from time to time.
- Net worth of ₹50 crore or more as on March 31 of the previous financial year.
- Net NPA of not more than 5% as on March 31 of the previous financial year.
- Net profit in the two immediately preceding financial years.
- No instance of default in maintenance of CRR/SLR during the immediately preceding financial year.
- The bank shall have a satisfactory track record of regulatory compliance and there shall be no instances of monetary penalty imposed for violation of RBI directives/guidelines during the two preceding financial years.
- The bank shall have a sound internal control system approved by a CISA-qualified independent auditor.