To provide greater flexibility in raising short term funds by regional rural banks, the Reserve Bank of India (RBI) on Friday decided to permit RRBs to issue Certificates of Deposit (CDs).
Regional Rural Banks are scheduled commercial banks of India that operate at regional level in different states of India. They were created to serve rural areas with basic banking and financial services.
RBI Governor Shaktikanta Das in his statement post the Monetary Policy Committee's bi-monthly meeting said that permission for CDs will facilitate greater flexibility in liquidity management.
Accordingly, RBI has also permitted all issuers of CDs to buy back their CDs before maturity, subject to certain conditions.
In December 2020, RRBs were permitted to access the liquidity windows of the Reserve Bank as well as the call/notice money market in order to facilitate more efficient liquidity management by these regional banks at competitive rates.