Role of Regional Rural Banks (RRBs) in the Economic Development of India

Author:A.K. Mittala & Munni Pandeyb*

Abstract:
Regional Rural Banks (RRBs) are those banks which were established in 1975 under the provisions of the Ordinance on the 26th September 1975 and the Regional Rural Banks Act, 1976 to develop the rural Indian economy and to develop a supplementary channel to the Cooperative Credit Structure with a view to enlarge institutional credit for the rural and agriculture sector. The share capital of RRB is contributed by the Government of India, the concerned State Government and the sponsoring public sector banks in the ration of 50%, 15% and 35% respectively. The area of operation of the RRBs is limited to notify few districts in a State. The RRBs mobilize deposits primarily from rural/semi-urban areas and provide loans and advances mostly to small and marginal farmers, agricultural laborers, rural artisans and other segments of priority sector. Indian Government initiated a process of structural consolidation of RRBs by amalgamating RRBs sponsored by the same bank within a State, with a view to provide better customer service by having better infrastructure, computerization, experienced work force, common publicity and marketing efforts etc. The amalgamated RRBs also get benefit from larger area of operation, enhanced credit exposure limits for high value and diverse banking activities. RRBs were also permitted to decide the need for conversion of the existing loss making branches into satellite / mobile offices keeping in view the cost-benefit aspect, the likely inconvenience that may be caused to the existing clientele, the effect of the conversion on the performance in the preparation of district credit plan and priority sector lending. With a view to providing better customer service in rural areas, RRBs may also convert their satellite offices into full-fledged branches after obtaining concurrence from their board and necessary license from the concerned Regional Office of RBI.

Keywords:Keywords: Regional Rural Banks (RRBs), NABARD, RBI, Economic Development, Weaker Section of Rural Areas.

DOI:

International Journal of Trade & Commerce (Vol: 7 Issue:2)