Regional Rural Bank in 1976

RRB is also known as “Gramin banks” as the meaning of the word “Gramin” is the village. Regional rural banks are banks owned by the government and are scheduled banks. They operate at the regional level of India. They come under the ownership of the ministry of finance of India. Their main purpose was to serve the basic financial activities in the rural areas. 

Objectives of RRB:

• The RRB aims to provide credit and deposit facilities for agriculture and other productive activities in rural areas. 
• The main focus is on providing such facilities to small and marginal farmers, agricultural laborers, and other small entrepreneurs in rural areas. RRBs are also important as it was not workable for RBI to reach every part of the country and be dynamic in decision-making relating to the financial needs of that area.
• Their area of coverage is a couple of districts in a state and the operation is limited to an area. This area is notified by the government. Its primary function is to provide many facilities, such as basic banking facilities, to the rural and some semi-urban areas. Another function is carrying out government operations. Some of these operations are providing UPI services, debit and credit cards, internet and mobile banking facilities, providing locker facilities, distribution of pensions, and disbursement of wages.

HISTORY OF RRB:

RRBs were established after the Regional Rural Banks Act in 1976.

• The Narsimham working group in 1970 suggested that around 70% of the Indian population lived in rural areas and it would be better to make a specific rural bank according to the area and its needs.
• Another reason to establish RRB was to end the zamindari system and allow people to deposit their money and also help them take loans.
• The first RRB in India, Prathama Bank, in Uttar Pradesh, was established on 2nd October 1975 with its headquarters in Moradabad. This bank was sponsored by the syndicate bank.

The shareholder structure of the RRBs:

• Central government–50%
• State government–15%
• Sponsored banks – 35% 

Organizational Structure:

1. Board of directors
2. Chairperson 
3. General Manager 
4. Chief Manager/ Regional manager 
5. Manager 
6. Assistant managers/ Officers 
7. Assistants

Some of the RRBs:

Andhra Pradesh Grameena Vikas Bank 

• It is sponsored by the State Bank of India 
• State–Telangana

Bangiya Gramin Vikash Bank 

• Sponsored by United Bank of India 
• State- West Bengal 

Chaitanya Godavari Grameen Bank

• Sponsored by Andhra Bank 
• State–Andhra Pradesh 

Dakshin Bihar Gramin Bank

• Sponsored by Punjab National Bank 
• State–Bihar 

J&K Grameen Bank

• Sponsored by J&K Bank Ltd.
• State – Jammu & Kashmir.

1. Karnataka Vikas Grameen Bank

• Sponsored by Syndicate Bank 
• State–Karnataka 

Madhya Pradesh Gramin Bank 

• Sponsored by Bank of India 
• State–Madhya Pradesh 

Nagaland Rural Bank

• Sponsored by State Bank of India 
• State–Nagaland 

Paschim Banga Gramin Bank

• Sponsored by UCO Bank 
• State–West Bengal 

Vidarbha Konkan Gramin Bank

• Sponsored by Bank of India 
• State–Maharashtra 

MINIMUM PAID-UP CAPITAL OF AN RRB: 

According to the Regional Rural Banks (Amendment) Bill, 2014, the allowed capital of the RRBs is Rs five crore, but it seeks to be raised to Rs 2000 crore. The bill also seeks to raise the minimum allowed capital from Rs 25 lakh to Rs 1 crore.

Each Regional Rural Bank’s allowed capital should comprise a completely funded share of just one hundred each Given that the Central Govt may raise or lower such capital after consulting with the National Bank and the Sponsor Bank provided that the equity share must therefore be not limited below twenty-five lakhs rupees and the shares must also in all situations be completely funded share of just one hundred rupees each.

CONCLUSION

The Regional Rural Banks Act, of 1976 was passed to establish banks in the rural and semi-urban regions of India with the motive or aim of providing basic financial and banking amenities to the weaker section of the society. The first-ever RRB was Prathama bank in Uttar Pradesh, now there are 56 RRBs all over India providing facilities to one or more districts in their allotted state.