RBI Adds Coastal Local Area Bank to Second Schedule of RBI Act, Giving It Scheduled-Bank Status

The Reserve Bank of India has announced that Coastal Local Area Bank Limited has been included in the Second Schedule to the Reserve Bank of India Act, 1934. RBI disclosed the development on September 4, 2026 through Press Release 2026-2027/1040.

The inclusion was made through RBI Notification DoR.LIC.No.S3539/22-03-070/2026-27 dated July 28, 2026. RBI says the notification was published in the Gazette of India, Part III, Section 4, on August 11, 2026.

What Second Schedule inclusion means

The RBI Act identifies banks included in its Second Schedule as scheduled banks. The Second Schedule is linked to Section 42 of the Act, which contains the statutory cash-reserve framework for scheduled banks. Inclusion therefore represents a formal regulatory-status milestone under the central-bank statute.

The September 4 announcement should be read narrowly and accurately. RBI's existing public bank directory continues to list Coastal Local Area Bank Limited under the category of Local Area Banks, with its location shown as Vijayawada, Andhra Pradesh. The Second Schedule announcement does not say that its underlying Local Area Bank category or geographic licence has been converted into some other banking class.

Notification and Gazette timeline

- July 28, 2026: RBI notification DoR.LIC.No.S3539/22-03-070/2026-27 is dated.

- August 11, 2026: RBI says the notification was published in the Gazette of India, Part III, Section 4.

- September 4, 2026: RBI issues its public press release announcing the Second Schedule inclusion.

The RBI press release does not state a separate effective date beyond this notification-and-Gazette timeline. Compliance teams should therefore rely on the official notification and applicable statutory provisions rather than infer an unstated date from the press-release publication.

Why finance and compliance teams should care

Bank classification is not merely a naming convention. Scheduled-bank status affects the statutory framework under which the institution is recognised under the RBI Act and can influence how internal legal, regulatory and treasury documentation describes the bank. Finance teams, auditors and counterparties should update master data and compliance references where they distinguish scheduled from non-scheduled institutions.

For Coastal Local Area Bank itself, policies, regulatory registers, customer or counterparty disclosures and internal documentation that refer to its RBI Act status should be reviewed for consistency with the Second Schedule inclusion. The announcement does not, by itself, alter every product condition, prudential requirement or operational permission applicable to the bank; those continue to depend on the wider RBI directions applicable to Local Area Banks and any institution-specific licence conditions.

The core development is precise: Coastal Local Area Bank Limited has now been included in the Second Schedule to the RBI Act and is therefore a scheduled bank for purposes of that statutory framework. Professionals should record the notification number and Gazette publication date, while avoiding the broader and unsupported assumption that the bank has ceased to be a Local Area Bank or has automatically acquired permissions not stated in RBI's announcement.

Official source: View the official source document

Key takeaway

Coastal Local Area Bank Limited has been included in the Second Schedule to the RBI Act and is therefore a scheduled bank for purposes of that statutory framework. The change does not, by itself, mean that the bank has ceased to be a Local Area Bank or has automatically acquired permissions not stated in RBI's announcement.