New Delhi, March 4, 2025 – The Ministry of Finance, Government of India, has issued a strongly worded directive to all Regional Rural Banks (RRBs) across the country, urging strict adherence to central government guidelines, instructions, and directions. The letter, signed by Under Secretary Shyamal Parthasarathi, highlights a troubling trend of non-compliance and inconsistent application of policies, which has led to widespread grievances, avoidable litigation, and unrest among RRB employees.
The directive, issued under the powers conferred by the RRBs Act, 1976, comes after consultations with the National Bank for Agriculture and Rural Development (NABARD) and the Reserve Bank of India (RBI). It emphasizes that government-issued guidelines on matters of public interest must be followed in a uniform and non-discretionary manner. However, the ministry has observed that, on multiple occasions, RRBs have failed to comply with these directives both in letter and spirit, exacerbating the situation on the ground.
Despite the clear intent of the guidelines, the ground reality paints a starkly different picture. Sources indicate that many RRBs continue to grapple with operational challenges, leading to varied interpretations and implementations of the directives. This discrepancy has fueled employee discontent and legal battles, prompting the ministry to step in with a firm stance.
To address these issues, the government has outlined a five-point action plan:
- RRBs are advised to ensure scrupulous compliance with central guidelines in a uniform manner.
- Any ambiguity in interpreting the directions should be referred to the Department of Financial Services (DFS) and not resolved at the RRB level.
- Receipt of the letter must be acknowledged within a week.
The ministry has also copied the directive to the Chairman of NABARD and the Chairmen/Managing Directors & CEOs of sponsor banks of RRBs for information and appropriate action. This move underscores the government’s intent to enforce accountability and streamline operations across the rural banking sector.
While the directive aims to restore discipline and uniformity, the ground situation remains complex. Industry insiders suggest that resource constraints and differing regional dynamics may continue to pose challenges, potentially testing the efficacy of this latest intervention.