Regional Rural Banks

INTRODUCTION
In India rural banks are also called regional rural banks (RRBs). The banking sector in India
is flourishing with a large and wide account holder base. Back in the late 20th century, banking
was not equally distributed. It was more accessible to the urban population. To bridge this gap
between the economic development of urban and rural areas of India, Regional Rural Banks
were established.
Regional Rural Banks are a type of commercial bank in India which are providing services to
the people in rural areas. These have the characteristics of both commercial banks and
cooperative societies. There were established with an objective of providing easily accessible
banking and credit services to the rural population
MANAGEMENT AND GOVERNING OF RRBs

RRBs operate at the district level in the states, and they may cover multiple districts within
that state. Just like any other commercial banks, the organisation of Regional Rural
Bank comprises of a Board of Directors, Chairperson, Managing Director, Manager, Regional
Managers, and the assistant’s staff.
The RRBs in India is governed and regulated by Reserve Bank of India (RBI), National Bank
for Agricultural and Rural Development (NABARD), Banking Regulation Act 1949, Regional
Rural Bank Act 1976.
HISTORY OF RRBs IN INDIA

The Narasimhan Committee on Rural Credit under the rule of PM Indira Gandhi made
certain recommendations for formation RRBs, which would be beneficial for the rural
population as compared to commercial banks.
• An Ordinance for the establishment of Regional Rural Banks was passed on September
26, 1975, this being the date of establishment of RRBs.
• The Regional Rural Banks Act (RRB Act) was passed in 1975 but implemented in 1976.
• Five RRBs were first established on the occasion of Gandhi Jayanti, on October 2nd,
1975. Later, many RRBs were established by the Government of India and respective
state governments.
The RRB Act 1976 states the functions of RRBs to provide financial assistance to
farmers, Medium and Small Enterprises (MSMEs), local craftsmen and artisans, for
agriculture, industries, trade, commerce, and their economic development. 25 RRBs were
established within a year from the passing of this Act.
OWNERSHIP AND SPONSORSHIP OF RRBs

The ownership of shares of Regional Rural Banks in India is divided among the Central
Government, State government, and the sponsoring banks:
• Central Government- 50%
• Sponsor banks- 35%
• State government- 15%
The sponsor bank helps the growth of an RRB by providing trainings to the staff of an RRB,
providing management consultations to the bank for a minimum period of 5 years.
RRBs AND THEIR SPONSON BANKS
RRB State Sponsor Bank
Jharkhand Rajya Gramin Bank Jharkhand State Bank of India
Dakshin Bihar Gramin Bank Bihar Punjab National Bank
Uttar Bihar Gramin Bank Bihar Central Bank of India
Aryavart Bank Uttar Bank of India

Pradesh
Baroda UP Bank Uttar Bank of Baroda
Pradesh
Prathama UP Gramin Bank Uttar Punjab National Bank
Pradesh
Bangiya Gramin Vikas Bank West Punjab National Bank
Bengal
Paschim Banga Gramin Bank West UCO Bank
Bengal
Uttar Banga Kshetriya Gramin West Central Bank of India
Bank Bengal
Odisha Gramya Bank Odisha Indian Overseas Bank
Utkal Gramin Bank Odisha State Bank of India
FUNCTIONS OF RRBs
It does all the functions that a commercial bank do. Apart from accepting deposits and
advancing loans and other agencies functions, it plays a vital in the implementation of welfare
activities that the government plan for the rural people. Like the cooperative banks it provides
financial assistance to farmers in development of agriculture and allied activities and to the
craftsmen, artisans etc.
• The Regional Rural Banks in India perform the important function of distribution of
wages under the MGNREGA (Mahatma Gandhi National Rural Employment Guarantee
Act), the Pradhan Mantri Gram Sadak Yojana (PMGSY).
• The pensions provided under the poverty alleviation schemes and pension schemes of
India are also distributed through these banks

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Regional Rural Banks

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INTRODUCTION

MANAGEMENT AND GOVERNING OF RRBs

HISTORY OF RRBs IN INDIA

OWNERSHIP AND SPONSORSHIP OF RRBs

Jharkhand Rajya Gramin Bank Jharkhand State Bank of India

Dakshin Bihar Gramin Bank Bihar Punjab National Bank

Uttar Bihar Gramin Bank Bihar Central Bank of India

Aryavart Bank Uttar Bank of India

Utkal Gramin Bank Odisha State Bank of India

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