Reconciliation of Pending Entries in Regional Rural Banks

Please refer to our Circular No. 41/ DoS.10/ 2009 dated 27 February 2009 (copy enclosed) advising all Rural Financial Institutions to take necessary steps to complete the pending reconciliation of accounts within a specified time frame. You may also refer to RBI’s Circular No. RBI/ 2013-14/ 527 dated 21 March 2014 (copy enclosed) advising all banks to credit amounts in accounts which have not been operated for ten years or any deposit or any amount remaining unclaimed for more than ten years into the DEA Fund.

2. The Board of Supervision (for StCBs, DCCBs and RRBs), in its 83rd Meeting held on 22 September 2021, has expressed concern over the inordinate delay in reconciliation of outstanding entries by RRBs. The presence of unreconciled entries under various intermediary accounts such as Inter-bank, Inter-branch, Sundry Debtors, Sundry Creditors, Sundry Expenses, Migra Dump accounts, etc., is indicative of weak Internal Checks and Control System in the bank and is a fertile ground for frauds in banks.

3. In this connection, we advise that banks may initiate urgent and definite steps to reconcile all outstanding entries pending for more than 6 months. Further, the amounts to the credit of any account which has not been operated upon for ten years or any deposits or any amount remaining unclaimed for ten years or more may be credited to the DEA Fund strictly in line with RBI’s Circular dated 21 March 2014.

4. It may be noted that during the conduct of Statutory Inspection of banks, NABARD will charge long pending unreconciled entries to the bank’s capital while assessing its financial position, i.e. REV/ Networth of the bank by treating such items as unrealizable assets/ erosion.

5. Please acknowledge receipt of this circular to our Regional Office concerned.

Ref.No. NB.DoS.HO.POL. 4463/J-1/2008-09

Circular No.41/DoS.10/2009

27 February 2009

The Chairman
All RRBs in the Country

The Managing Directors
All SCBs in the Country

The Chief Executive Officers/General managers All DCCBs in the Country

Dear Sir

Adherence to Prudential Norms and Completion of Reconciliation of Accounts in RRBs and Co-operative Banks


While reviewing the performance of banks as per the Statutory Inspections conducted by NABARD, the the Board of Supervision (BoS) ( for SCBs, RRBs and DCCBs) in its 38th meeting held on 04 December 2008 had observed as under:

(i) The Inspection Reports of some of the banks revealed that the banks resort to evergreeing of NPAs thereby making lesser provisions, contrary to the instructions of the RBI/NABARD on prudential norms. It is expected that the banks should strictly abide by the prudential norms while classifying their assets and make appropriate and correct provisioning, as required. You will appreciate that the Inspection Reports issued by NABARD have been highlighting the inconsistencies in the classification of assets and provisioning made by the banks by way of divergence statement. This is being done with a view to facilitating the banks to once again check up the classification of assets done by them so that such deficiencies do not recur in future. It is regretted that despite pointing out by way of divergence statements the banks continue to adopt wrong classification of assets, thereby making lesser provisions deliberately so as to show a better financial position of the banks. It is once again reiterated that banks need to be more transparent in the operations while disclosing their financial affairs to the stake holders. We, therefore, request you to kindly issue necessary instructions to the branches for classifying the bank's assets strictly in accordance with the RBI/NABARD guidelines under advice to our Regional Office. Please note that NABARD would not like to have any compromise on adherence to the prudential norms by the supervised banks. We would like to indicate that our inspecting officers have been advised to critically verify the "evergreening of NPAs" by the banks during onsite inspections.

(ii) Another area of concern expressed by the Board of Supervision is the undue delay in reconciling inter-branch and inter-bank accounts by the banks. While the position in respect of RRBs is somewhat better, the Co-operative Banks need to bestow their attention to ensure completion of reconciliation of accounts within a specific time frame. We, therefore, urge upon the management of the banks to take necessary steps to complete the pending reconciliation of accounts within a specified time frame, say, within six months. The action taken in this regard may please be advised to us together with the latest position of reconciliation of accounts indicating the number of debit and credit entries and the amount involved as on 31 March 2009 under intimation to our Regional Office.

Yours faithfully
(G.C. Panigrahi)
Chief General Manager

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