Section 35A in the Banking Regulation Act, 1949 confers powers on Reserve Bank that if it is satisfied that either in public interest or in interest of banking policy or to prevent the affairs of any banking company being conducted in a manner detrimental to the interests of the depositors or in a manner prejudicial to the interest of the banking company or to secure the proper management of any banking company generally, it is necessary to issue directions to banking companies generally or to any banking company in particular, it may, from time to time, issue such directions as it deems fit, and the banking companies or the banking company, as the case may be, shall be bound to comply with such directions.
In exercise of this power the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest so to do, hereby, amends the instructions on ‘Internet Banking Facility for Customers of Regional Rural Banks’, keeping in view the need to promote the spread of digital banking customers in rural areas, the eligibility criteria applicable to Regional Rural Banks for offering Internet Banking with transactional facilities to their customers have been revised. The amendments as mentioned below will come into force from 1st November 2022 and is applicable to all Regional Rural Banks (RRBs) as notified by Reserve Bank of India.
The revised eligibility criteria to seek approval for providing Internet Banking with transactional facility by RBBs to their customers are as under:
- Full implementation of Core Banking Solutions (CBS) which includes Internet Banking, Phone Banking, Automated Teller Machines (ATMs), Fund Transfers remotely and immediately (IMPS, NEFT, RTGS etc.) and migration to Internet Protocol Version 6 (IPv6) which is the most recent version of the Internet Protocol (IP), the communication protocol that provides an identification and location system for computers on networks and routes traffic across the Internet;
- Compliance with minimum prescribed Capital-to-risk weighted assets ratio (CRAR) requirement as applicable from time to time. The current CRAR is 9% as notified by RBI;
- Net worth of ₹50 crore or more as on March 31 of the previous financial year;
- Net Non-Performing Asset (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 Cash Reserve Ration (CRR is a reserve maintained by banks with the RBI) /Statutory Liquidity Ratio (SLR is an obligatory reserve that commercial banks must maintain themselves) 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.
- For extending internet banking services with transactional facility, RRBs fulfilling the above-mentioned criteria and other conditions prescribed in the circular dated 19th November 2015 on ‘Internet Banking Facilities for Customers of Regional Rural Banks’, shall submit an application to the concerned Regional Office of RBI through National Bank for Agriculture and Rural Development (NABARD) as prescribed in the aforementioned circular.