Regional Rural Bank

“Regional Rural Bank as its name states, it was established to take care the rural credit and financing in regional areas of agricultural importance. As RBI gives independence for RRB to fix its interest rates within 18%, we can conclude that RRB plays a vital role in rural financing that helps all agricultural and other rural sectors”.

                                                                                                                                              Manivannan.J

Establishment

1. Regional Rural Banks were established under the provisions of an Ordinance passed on 26 September 1975 and the RRB Act.1976 to provide sufficient banking and credit facility for agriculture and other rural sectors.
2. The Narasimhan Committee during the tenure of Indira Gandhi's government with a view to include rural areas into economic mainstream since that time about 70% of the Indian Population was of Rural Orientation.
3. There were five commercial banks, Punjab National Bank, State Bank of India, Syndicate Bank, United Bank of India and United Commercial Bank, which sponsored the regional rural banks.
4. Reserve Bank of India had laid down ceilings on the rate of interest to be charged by these RRBs. However from August 1996 the RRBs have been granted freedom to fix rates of interest, which is usually in the range of 14-18% for advances.

Objectives

1. To provide rural credit and rural finance
2. To provide credit and other facilities particularly for small and marginal farmers, agricultural labors, artisans and small entrepreneurs
3. To develop agriculture, trade, commerce, industry and other productive activities in the rural areas.
4. To reduce regional imbalances and increase rural employment generation

Why RRB differs from other commercial Banks ... ?

1. Providing cheap and liberal credit facilities to small and marginal farmers, agri­culture labors, artisans, small entrepreneurs and other weaker sections. 
2. Save the rural poor from the moneylenders.
3. Increase rural employment opportunities
4. Encourage entrepreneurship in rural areas.
5. Developing the underdeveloped regions to remove economic dispar­ity of the regions
6. Accelerate the economic growth in the particular region.
7. Cultivating the rural banking among the rural populations who often are struck under the money lenders and land lords.
8. RRB’s lending rates are not higher or a clutch to the farmers and agricultural labors
9. Carrying out government operations like disbursement of wages of MGNREGA workers, distribution of pensions etc.
10. Providing Para-Banking facilities like locker facilities, debit and credit cards.

Current Status of RRBs in India

1. On 31 March 2006, there were 133 RRBs (post-merger) covering 525 districts with a network of 14,494 branches.
2. 25 RRBs have been merged in January 2013 into 10 RRBs which counts 67 RRBs till 1st week of June 2013.
3. At present there are 67 RRB's in India.