About RRBs

•  The Narasimham committee on rural credit recommended the establishment of Regional Rural Banks (RRBs) on the ground that they would be much better suited than the commercial banks or co-operative banks in meeting the needs of rural areas. 
• Accepting the recommendations of the Narasimham committee, the government passed the Regional Rural Banks Act, 1976 and established 19 RRBs under the Act.
• The RRBs were established with a view to developing the rural economy by providing credit and other facilities, particularly to small and marginal farmers, agricultural labourers, artisans and small entrepreneurs.
• Each RRB is sponsored by a public sector bank, which provides assistance in several ways‚ viz., subscription to its share capital, provision of such managerial and financial assistance as may be mutually agreed upon and help the recruitment and training of personnel during the initial period of its functioning.
• Regional Rural Banks are jointly owned by the Government of India, the concerned State Government and Sponsor Banks with the issued capital shared in the proportion of 50%, 15% and 35% respectively.
• NABARD is entrusted with the responsibility for conduct of statutory inspections of Regional Rural Banks. The regulatory powers continue to be vested with the Reserve Bank of India.

Objectives:

• RRBs established with the explicit objective of
  • Bridging the credit gap in rural areas
  • Check the outflow of rural deposits to urban areas
  • Reduce regional imbalances and increase rural employment generation
• The main objectives of setting up the RRB is to provide credit and other facilities, especially to the small and marginal farmers, agricultural labourers, artisans and small entrepreneurs in rural areas.
• Each RRB will operate within the local limits specified by notification. If necessary, a RRB will also establish branches or agencies at places notified by the Government.

• The RRBs are required to provide 75% of their outstanding advances as priority sector lending with primary focus on agricultural credit, including small and marginal farmers, as well as micro entrepreneurs and rural artisans.

Why in News?

• Union Minister for Finance and Corporate Affairs Nirmala Sitharaman chaired a review meeting of Regional Rural Banks (RRBs) in New Delhi.

https://pib.gov.in/PressReleasePage.aspx?PRID=2046720