Regional Rural Banks

Regional Rural Banks in India are commercial banks that operate in diverse rural locations throughout the country. IBPS administers the exam for Officers and Office Assistants in diverse RRBs.

Department Of Financial Services (Dfs)

The Department of Financial Services (DFS) is in charge of various significant government programs/initiatives and reforms pertaining to the Banking Sector, Insurance Sector, and Pension Sector in India. Initiatives and reforms linked to Inclusive Growth, Welfare Benefits, and Insurance as a Risk Transfer Mechanism; Credit Availability to critical sectors of the economy/farmers/common man are some of the Department’s primary priority areas.

Flagship Schemes

The Department currently runs/manages several flagship schemes, including the Pradhan Mantri Mudra Yojana (PMMY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Vaya Vandana Yojana (PMVVY), Atal Pension Yojana (APY), Pradhan Mantri Jan Dhan Yojana (PMJDY), Pradhan Mantri Suraksha Bima Yojana (PMSBY).

The Department assists

• Public Sector Insurance Companies (PSICs),
• Public Sector Banks (PSBs), and
• Development Financial Institutions (DFIs) such as the
• National Bank for Agriculture and Natural Resources (NABARD),
• India Finance Company Co. Ltd. (IIFCL),
• Small Enterprise Development Bank of India (SIDBI),
• Outsource Bank of India (EXIM Bank), and
• National Housing Bank (NHB),
• Industrial Finance Corporation of India with policy issues (IFCI).

It also analyses the performance of such PSICs, PSBs, and DFIs and develops policies for India’s Banking and Insurance Sector. This Department is responsible for legislative and policy concerns pertaining to the respective regulatory organizations, namely the Insurance Regulatory Development Authority of India (IRDAI), Reserve Bank of India (RBI), and the Pensions Fund Regulatory and Development Authority (PFRDA).DFS is also in charge of the legal framework for debt recovery.

Functions Of Regional Rural Banks

As a Registered Commercial Bank, the major functions of regional rural banks are to receive deposits and disburse loans. The following sections highlight the critical responsibilities of Regional Rural Banks.

1. Take Deposits

• RRBs take payment from their customers who have bank accounts.
• Deposits can be placed into either a current or a savings account.
• Deposits can also be placed in one-time or recurring amounts.

2. Loan Extender

• According to the RRB Act of 1975, the RRB can make loans and provide credit to the Subsector (PS). Loans to this area are categorized as PSL or Priority Sector Borrowing. 
• The RBI declared that RBBs would be covered in the PSL beginning in the fiscal year 1997.

3. Reimbursement of wages

• Regional Rural Banks in India play a significant role in wage distribution underneath the MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act), as well as the Pradhan Mantri Gram Sadak Yojana (PMGSY).
• Pensions offered under India’s poverty alleviation and pension plans are also provided through these institutions.

4. RRBs’ secondary functions

• Regional Rural Banks in India, like commercial banks, provide agency services and ordinal utility services to their customers as supplementary duties.
• RRBs provide agency services such as foreign currency, payment services, money wire transfers, and so on.
• RRBs in India also provide utility services such as ATMs, UPI, debit card issuance, locker facilities, and so on.

RRBs In India Is Regulated

1) Reserve Bank of India: The RBI Act 1934 and the Financial Regulation Act 1949 are the two main regulating statutes in India for commercial banks.

2) NABARD: The National Bank for Agricultural and Rural Development of India is the primary regulatory organization for India’s rural banking sector. The RBI founded NABARD on July 12, 1982, with the goal of improving credit flow from urban areas to rural and sub-areas of India. Its primary tasks include monitoring, policy formulation, and the planning of rural banks’ activities and credit systems. NABARD also assists rural banks in their growth and monitors their operations on a regular basis.

Regional Rural Banks’ Importance

• Reduce the rural-urban divide by channeling funds, services and resources to rural areas.
• Regional Rural Banks open the way for the participation of the marginal population, such as small farmers, below-the-poverty-line (BPL) farmers and employees, small entrepreneurs, craftsmen, women, and so on.
• Regional Rural Banks promote rural businesses by offering short-term loans, insurance, and other services, and they help to strengthen the importance of small businesses in rural areas.
• Providing assistance to agriculturists in the form of loans, advances, and insurance for agricultural inputs, machinery, processing, promotional efforts, and cooperative societies aids in the expansion of agriculture and the progress of farmers.
• Due to their minor financial demands, lower incomes, and other factors, many banking institutions do not engage with farmers and the rural sector. In such a circumstance, a distinct banking system is required to defend the interests of these industries.

Conclusion

The Department of Financial Services is responsible for the operation of banks, financial firms, insurance companies, and the National Pension System. The Secretary (FS) leads the Department, which is supported by three Additional Secretaries (AS), seven Joint Secretary (JS), one Economic Adviser (EA), and a Deputy Director General (DDG). The primary goal of establishing RRBs in India was to provide people living in rural regions with the necessary banking services and information.