Regional Rural Banks (RRBs)-Introduction,Objective,Features& Functions

Introduction

Regional Rural Banks are government owned scheduled commercial banks of India that operate at regional level in different states of India. These banks are under the ownership of Ministry of Finance, Government of India. They were created to serve rural areas with basic banking and financial services.

The RBBs Act has made various provisions regarding the incorporation, regulation and working of RRBs. According to this Act, the RRBs are to be set-up mainly with a view to develop rural economy by providing credit facilities for the purpose of development of agriculture, trade, commerce, industry and other productive activities in the rural areas.

Such facility is provided particularly to the small and marginal farmers, agricultural laborer's, artisans, and small entrepreneurs and for other related matters.

Objectives

The objective of regional rural banks is to develop the rural economy by providing credit and other facilities for agriculture and other productive activities in rural areas. They provide these facilities to small and marginal farmers, rural artisans, agricultural laborer's and other small entrepreneurs working in the rural areas.

The objectives of RRBs can be summarized as follows:

• To provide loan for backward class public
• To opening branches of bank in rural areas.
• To save the rural poor from the moneylenders.
• To cultivate the banking habits among the rural people and mobilize savings for the economic development of rural areas.
• To increase employment opportunities by encouraging trade and commerce in rural areas.
• To encourage entrepreneurship in rural areas.
• To cater to the needs of the backward areas which are not covered by the other efforts of the Government?
• To develop underdeveloped regions and thereby strive to remove economic dispar­ity between regions.
• To increase employment opportunities by encouraging trade and commerce in rural areas.

Features

The Features of RRBs can be summarized as follows:

• The area of operation of a rural bank is limited to a specified region which comprises of one or more districts.
• These banks cannot have a lending rate which is higher than the prevailing lending rate of cooperative credit societies in any particular state.
• The salary structure of the employees of these banks is fixed in consonance with the salary structure of the employees of the state government, local authorities of comparable level and status in the area.
• They are public sector banks. The paid-up capital of each bank is Rs. 25 lakhs. 50 percent of the capital is contributed by the Central Government. The concerned state government contributes 15 percent. 35 percent is contributed by the sponsoring public-sector commercial banks.
• It grants loans and advance only to the small and marginal farmers, agricultural laborer's, small traders\ entrepreneurs.
• This is sponsored bank. It is sponsored by a scheduled commercial bank.
• The RRB charges interest rates as adopted by the co-operative society in the state.

Functions

• Providing of loans and advance to the farmers and other person already engaged in agriculture activities.
• Providing of loans and advance to the co-operative societies and other society which are involved in agriculture processing .
• Accepting the various types of deposits from the rural and other connected areas.
• providing loans and advances to small entrepreneurs and others who are engaged in trade, commerce and industry.
• Setting up and Maintenance of godowns and warehouse.
• Reducing the dependency of weaker section of money lenders.
• Undertaking of the supply of agricultural inputs & equipment's to farmers.
• Making backward and tribal areas economically better by opening new branches and extending micro credit facilities and operating the scheme of inclusion.

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