The Regional Rural Banks (RRBs) were established in 1975 under the provisions of the Ordinance promulgated on 26th September, 1975 and Regional Rural Banks Act, 1976.
The purpose of RRBs to develop the rural economy by providing, for the purpose of development of agriculture, trade, commerce, industry and other productive activities in the rural areas, credit and other facilities, particularly to small and marginal farmers, agricultural laborers, artisans and small entrepreneurs, and for matters connected therewith and incidental thereto.
They were set up/sponsored by public sector banks. In RRBs, the central government owns 50%, state government 15% and sponsor bank 35%. For example, Syndicate Bank is the sponsor of Prathama Bank.Â
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Functions of RRBs
To provide safety to the savings of customers 
To create credit and increase the supply of money 
To encourage public confidence in the financial system
 To mobilize the savings of public 
To increase its network so as to reach every segment of the society 
To provide financial services to all customers irrespective of their level of income
To bring in social equity by providing financial services to every stratum of society.
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