The parliament in an effort to revamp the RRBs passed the RRB Amendment Act to amend the RRB Act, 1976.
Main provisions of the act are-

• Total Authorized Capital of RRBs is to be raised to Rs. 2000 crores in place of 5 crores earlier.
• The Total Authorized Capital of Rs. 2000 crores is to be divided into 200 crore shares of Rs. 10 each.
• RRBs have been allowed to raise capital from private investors by issuing shares. But on condition that combined shareholding of Union+ State+ Sponsor bank should not fall below 51%.
• States can buy more shares, to increase their shareholding above 15%.
• RRB can appoint Board of directors from outside union-state and sponsor bank nominated people. One person cannot become director in maximum 2 RRBs.
• Director’s tenure limit: 3 years. Maximum two terms allowed.

Advantages over the previous Act of 1976-

• The Act aims at expanding the Total Authorized Capital of the RRBs thereby increasing their operational capabilities.
• The Act also divides the total capital into smaller shares to increase their tradability in the shares market. Now due to cheap cost of shares more people will buy them thereby infusing capital in the RRBs.
• By allowing independent directors the Act tries to bring in efficient management and accountability into the functioning of the RRBs.
• The Act allows states to raise their share in the RRBs thereby having more say in decision making of these banks.