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Assignment: Regional Rural Bank

Regional Rural Banks (RRBs) were established in 1975 to provide banking and credit facilities to rural areas of India. RRBs operate at the regional level in states across India. They provide basic banking services to rural and some urban areas. Over time, the number of RRBs has decreased through phases of amalgamation, or merging, from over 190 banks in the 1990s to 43 banks currently. The key functions of RRBs are accepting deposits, providing loans, and facilitating government services and programs in rural areas.

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Harsha Vijay
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794 views

Assignment: Regional Rural Bank

Regional Rural Banks (RRBs) were established in 1975 to provide banking and credit facilities to rural areas of India. RRBs operate at the regional level in states across India. They provide basic banking services to rural and some urban areas. Over time, the number of RRBs has decreased through phases of amalgamation, or merging, from over 190 banks in the 1990s to 43 banks currently. The key functions of RRBs are accepting deposits, providing loans, and facilitating government services and programs in rural areas.

Uploaded by

Harsha Vijay
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Assignment

Regional rural bank:

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. As a result, Five Regional Rural Banks were set up
on 2 October 1975,Gandhi Jayant.

Regional Rural Banks (RRBs) are Indian Scheduled Commercial


Banks (Government Banks) operating at regional level in different States
of India. They have been created with a view of serving primarily the
rural areas of India with basic banking and financial services. However,
RRBs may have branches set up for urban operations and their area of
operation may include urban areas too.

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. RRBs
also perform a variety of different functions. RRBs perform various
functions in following heads:

Providing banking facilities to rural and semi-urban areas:

Carrying out government operations like disbursement of wages


of MGNREGA workers, distribution of pensions etc.
Providing Para-Banking facilities like locker facilities, debit and
credit cards, mobile banking, internet banking etc.

Functions of RRB:

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 banks in India.


These have the characteristics of both commercial banks and cooperative
societies. Let’s look at the functions, and regulation of Regional Rural
Banks in India.

There were established with an objective of providing easily


accessible banking and credit services to the rural population and
mobilising financial resources from the urban areas to rural districts of
India. Hence, RRBs form a vital component of the financial service
sector in India.

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 amalgamation of Regional Rural Banks:

The merging of two or more banks together is known as


amalgamation. In the 1990s, more than 190 RRBs existed. The
amalgamation of these banks was done in a phase-wise manner. 

In January 2013, 25 RRBs were merged into ten banks, reducing


the number to 67 banks in the first phase. It was further reduced to 56
banks in March 2016 in the second phase. In the third phase, it was
reduced to 43. 

Since a Regional Rural Bank is a Scheduled Commercial Bank, its


primary functions are to accept deposits and to disburse loans. The
important functions of Regional Rural Banks are discussed below. 

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. RRBs
also perform a variety of different functions. RRBs perform various
functions in following heads:

 Providing banking facilities to rural and semi-urban areas.


 Carrying out government operations like disbursement of wages
of MGNREGA workers, distribution of pensions etc.
 Providing Para-Banking facilities like locker facilities, debit and
credit cards, mobile banking, internet banking etc.

 Small financial banks.

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