The National Bank for Agriculture and Rural Development (NABARD) has advised Regional Rural Banks (RRBs) to reduce their dependence on officials deputed from Sponsor Banks. NABARD said that deputation should be kept to the minimum and used only when it is genuinely required.
In a letter dated 27 August 2026, addressed to the Chairmen/ Chairpersons of all RRBs, NABARD said that a significant number of Sponsor Bank officials are currently working in RRBs across different functional areas.
Right now, mostly the Chairmen of RRBs are from Sponsored Banks. Banking experts say that after this letter from NABARD, it’s expected that RRBs may shift their strategies and in coming years, chairmen may be selected from within RRBs.
Under Section 17(1) of the Regional Rural Banks Act, 1976, Sponsor Banks can depute officers or employees to RRBs on request to help in the efficient functioning of the bank.
However, NABARD said that while deputation may be necessary in certain situations, continued dependence on deputed officials could affect the development of internal managerial and leadership capabilities within RRBs.
The purpose of this directive from NABARD is to make RRBs more self-reliant and ensure their long-term sustainability.
Deputation Should Be Minimum and Need-Based
NABARD has advised RRBs to follow three key principles regarding deputation of Sponsor Bank officials:
- Deputation should be kept to the minimum and should be strictly need-based.
- Deputation should be used only when suitable officers are not available within the RRB.
- Any requirement for deputation should be clearly justified and approved by the Board of the RRB as part of manpower planning.
RRBs Asked to Develop Their Own Officers
NABARD has also asked RRBs to take steps to develop their own cadre of officers. This should include:
- Capacity building and training
- Structured career progression
- Giving officers exposure to important and critical functions
The aim is to create a stronger pool of RRB officers who can take up managerial and leadership responsibilities within the bank.
Time-Bound Plan to Reduce Deputation
NABARD has suggested that RRBs may prepare a time-bound roadmap to gradually reduce their dependence on deputed officials.
The objective is to progressively phase out such arrangements over time, wherever they are not necessary.
This would allow RRBs to gradually build their own institutional capabilities instead of depending on officials from Sponsor Banks.
Expected Benefits for RRBs
According to NABARD, reducing excessive dependence on deputed officials is expected to:
- Improve the institutional capacity of RRBs
- Ensure better continuity in management
- Strengthen governance frameworks
- Develop internal leadership capabilities
- Make RRBs more self-reliant
NABARD has asked all RRBs to review their present position regarding deputation and take necessary steps to align themselves with the above guidance.
