Regional Rural Banks (rrb)

RRBs (Regional Rural Banks) are Indian government-owned scheduled commercial banks that operate at a regional level in several states. These banks are owned by the Indian government's Ministry of Finance. They were established to provide basic banking and financial services to rural communities. RRBs, on the other hand, have urban branches.

The operation's territory is limited to the area notified by the Indian government, which includes one or more districts of the state. RRBs perform a variety of tasks, including providing banking services to rural and semi-urban areas, carrying out government operations such as disbursing MGNREGA workers' wages and distributing pensions, and providing para-banking services such as lockers, debit and credit cards, mobile banking, internet banking, and UPI services.

 

The RBI and NABARD are the main regulatory body of the RRBs.

 

To provide adequate banking and credit facilities for agricultural and other rural sectors, Regional Rural Banks were founded under the requirements of an ordinance passed on September 26, 1975, and the RRB Act 1976. 

 

As a consequence of the recommendations of the Narsimha Committee on Rural Credit, five RRBs were established on October 2, 1975, during Indira Gandhi's government. The goal was to bring rural India into the economic mainstream, as rural India accounted for roughly 70% of the Indian population.

 

The first RRB was Prathama Bank, which had its headquarters in Moradabad, Uttar Pradesh. It was sponsored by Syndicate Bank and had a Rs. 5 crore approved capital. 

 

 Gaur Gramin Bank (sponsored by UCO Bank), Gorakhpur Kshetriya Gramin Bank (sponsored by State Bank of India), Haryana Kshetriya Gramin Bank (sponsored by Punjab National Bank), and Jaipur-Nagpur Anchalik Gramin Bank (sponsored by Punjab National Bank) were the other four RRBs (sponsored by UCO Bank).

 

The RRBs were 50 percent, 15 percent, and 35 percent owned by the federal government, state government, and sponsoring bank, respectively.

 

•    The RRB government-based banks, also known as Regional Rural Banks, operate at the regional level in several states across the country.

 

•    The RRBs are tasked for meeting the requirements of rural people in backward areas and promoting primary financial inclusion.

 

•    The RRBs' principal goal is to improve the rural economy by providing lending and other financial services to small, marginal farmers, agricultural labourers, small artisans, and others in rural areas.

 

•    There are currently 43 RRBs in the country, each of which is supported by the Indian government in partnership with state governments and sponsor banks.

 

•    After commercial and cooperative banks, Regional Rural Banks, or RRBs, are the third layer of commercial banking organisations.

 

•    The RRBs were founded in accordance to the Narasimham Committee's recommendations to meet the rural credit needs of farmers and other rural populations.

 

The Cabinet Committee on Economic Affairs has approved the continuation of the process of recapitalization of Regional Rural Banks (RRBs) by giving minimum regulatory capital to RRBs for another year, up to 2020-21.

 

This is for those RRBs who are unable to meet the Reserve Bank of India's regulatory requirements of a minimum Capital to Risk Weighted Assets Ratio (CRAR) of 9%.

 

The cabinet authorised the recapitalization of RRBs in 2011 based on the recommendations of a committee chaired by K C Chakrabarty.

 

Based on the CRAR status of RRBs as of March 31st of each year, the National Bank for Agriculture and Rural Development (NABARD) determines those RRBs that require recapitalization assistance to maintain the mandated CRAR of 9%.

 

Regional Rural Banks with enhanced CRAR will be able to meet the credit demand in rural areas if they are financially stronger and more stable.

 

RRBs would be able to continue lending to these types of borrowers under their PSL aim, and so promote rural livelihoods, with the recapitalization support to strengthen CRAR.

 

The merging of RRBs occurs on a regular basis. In January 2013, 25 RRBs were merged into ten RRBs, resulting in a total of 67 RRBs. There were 56 RRBs in March 2016, with a network of 14,494 branches covering 525 districts. There will be 43 RRBs in India on April 1, 2020.

 

As a scheduled commercial bank, the Regional Rural Bank is primarily responsible for receiving deposits and disbursing loans. The RRBs have the following important functions:

•    Accepting deposits in current or savings accounts from members. They can also be set up as recurring or fixed deposits.

 

•    Providing loans to small and marginal farmers, craftsmen and artisans, medium and small size firms, housing, local traders, renewable energy, and other businesses that require development and financing.

 

•    The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and the Pradhan Mantri Gram Sadak Yojana require RRBs to disburse wages (PMGSY). It also distributes stipends under poverty-relief programmes.