About RRBs

• Based on the recommendations of the Narasimham committee on rural credit, Regional Rural Banks (RRBs) were established in 1975 under the Regional Rural Banks Act, 1976 to provide financial assistance to different segments of the rural population.
• The main objectives of setting up the RRB is to provide credit and other facilities, especially to the small and marginal farmers, agricultural laborers, artisans and small entrepreneurs in rural areas.
• Each RRB is sponsored by a public sector bank, which provides assistance in several ways.
• RRBs 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
• 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.