The Reserve Bank of India (RBI) on November 28, 2025, issued the Reserve Bank of India (Local Area Banks – Miscellaneous) Directions, 2025.
The following has been stated: -
•The Reserve Bank of India (Local Area Banks – Miscellaneous) Directions, 2025 consolidate various regulatory instructions for Local Area Banks (LABs), effective immediately, though guidelines on Alternative Investment Funds (AIFs) are deferred to January 01, 2026.
•A major focus is the Depositor Education and Awareness (DEA) Fund, stipulating that LABs must transfer all unclaimed credit balances and deposits (including interest) that are inoperative for ten years or more to the Fund.
•LABs must repay claimants first and then seek reimbursement from the Fund, with a prescribed interest rate applicable on the principal amount from the date of transfer to the Fund.
•Procedurally, LABs must register on the e-Kuber system and transfer the due amount during the last five working days of the subsequent month, ensuring only one monthly transfer. Claims for refund from the Fund are limited to the first ten working days of every month.
•The directions also mandate Board-approved policies for areas like AIF investment, donations, mandatory employee leave for sensitive positions, and certification for specialised operations.
•These directions shall become effective on November 28, 2025, except for instructions pertaining to investments in Alternative Investment Funds (AIFs) contained in paragraph 33 to paragraph 38 of these Directions which shall come into force from January 01, 2026, or from any earlier date as decided by a Local Area Bank as per its internal policy.
[Notification No.:RBI/DOR/2025-26/246 DOR.SOG(SPE).REC.No.165/13-04-001/2025-26]
