Regional Rural Banks (RRBs)

  • RRBs were set up as government-sponsored, regional based rural lending institutions under Regional Rural Banks Act, 1976.
  • They are scheduled commercial banks (Government banks) and are configured as hybrid micro banking institutions, combining local orientation and small scale lending culture of cooperatives and business culture of commercial banks.
  • Objective: 
    • They have been created with a view to serve primarily rural areas of India with basic banking and financial services.
    • They fulfill credit needs of relatively unserved sections in rural areas-small and marginal farmers, agricultural labourers and socio-economically weaker sections and small entrepreneurs in rural areas for development of agriculture, trade, commerce, industry and other productive activities.
    • RRBs can also set branches set up for urban operations and their area of operation may include semi urban or urban areas too.
  • Ownership: 
    • RRBs are jointly owned by Central Government, concerned State Government and Sponsor Banks with the issued capital shared in the proportion of 50%, 15% and 35% respectively.
  • Functions: provide banking facilities to rural and semi-urban areas, they carry out government operations like disbursement of wages of MGNREGA workers, distribution of pensions etc, they provide para-Banking facilities like locker facilities, debit and credit cards. They can also function as Small financial banks.