RBI issues Notification regarding contribution to the Rural Infrastructure Development Fund and other funds

Apr 28, 2020 | by Avantis RegTech Legal Research Team

Finance & Taxation Compliance

The Reserve Bank of India (RBI) on April 23, 2020, has decided that all Priority Sector for Primary (Urban) Co-operative Banks (UCBs) are required to contribute to Rural Infrastructure Development Fund (RIDF) established with NABARD and other Funds with NABARD / NHB / SIDBI / MUDRA Ltd., against their priority sector lending (PSL) shortfall with effect from March 31, 2021 in reference to Revised guidelines on lending to UCBs.

The operational details are as follows:-

  1. The PSL achievement will be determined at the end of the financial year based on the average of priority sector target / sub-target achievement as at the end of each quarter of the year.
  2. The interest rate will be fixed by RBI from time to time.
  3. The misclassifications reported by the Reserve Bank's Department of Supervision would be adjusted or reduced for allocation to various funds in subsequent years.
  4. Non-achievement of PSL targets will not be included as one of the criteria for classifying a UCB as Financially Sound and Well Managed (FSWM) with effect from March 31, 2021.

[RBI Notification No. DOR (PCB).BPD.Cir.No.12/09.09.002/2019-20]


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