Regional Rural Banks (RRBs) are local banking organizations that operate in rural areas of India. They were created to provide basic banking services to rural communities. RRBs are jointly owned by the central government, state government, and sponsoring bank. They provide credit and banking facilities tailored to small farmers, laborers, and artisans. RRBs also carry out government operations like distributing pensions and wages. Their role is to promote development and ensure adequate credit flow in rural areas.

1. Role of RRB in India
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Rachana- 16331E005

2. What are RRB’s
• Regional Rural Banks are local level banking
organizations operating in different States of India.
• Created with a view to serve primarily the rural areas of
India with basic banking and financial services.
• The area of operation of RRBs is limited to the area as
notified by Government of India covering one or more
districts in the State.
• Narsimham committee conceptualized the foundation of
regional rural banks in India

3. Structure of RRB’s
• The authorized capital -fixed at Rs. 1 crore
• Issued capital at Rs. 2 lakhs
▫ 50 %– be subscribed by the Central Government,
▫ 15 %by the concerned State Government
▫ Rest 35%by the sponsoring bank.
• RRB are directed and managed by a Board of
Directors consisting
 Chairman
 The chairman is appointed by the Central Government and
his term of office does not exceed five years.
 Three directors
 nominated by the Central Government
 not more than two directors to be nominated by the State
Government concerned
 not more than 3 directors to be nominated by the sponsoring
bank.

5. Role of RRB’s
• Providing banking facilities to rural and semi-urban areas.
▫ RRB’s were mainly established to meet the credit requirement of small and
marginal farmer, landless labor and artisians of rural India with a focus on agro
sector.
• Government operations
▫ Carrying out government operations like disbursement of wages of MGNREGA
workers, distribution of pensions etc.
• Facilities
▫ Providing Para-Banking facilities like locker facilities, debit and credit cards
• All round development
▫ Rural banking institutions are playing a very important role for all-round
development of rural areas of the country. In order to support the rural banking
sector in recent years, Regional Rural Banks have been set up all over the country
with the objective of meeting the credit needs of the most under privileged sections
of the society.
• Flow of credit
▫ These were envisaged as low cost financial intermediation structure in rural areas
to ensure sufficient flow of institutional credit for agriculture and other rural
sectors.
• Local effect
▫ RRB’s were expected to have the local feel and familiarity of cooperative banks
with managerial expertise of the commercial banks.
• Growth
▫ RRB’s penetrat4ed to every corner of the country and extended a helping hand in
the growth process of the country.