Regional Rural Banks (RRBs) are government owned scheduled commercial banks of India that operate at regional level in different states of

India India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area, the List of countries and dependencies by population, second-most populous ...

. These banks are under the

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. They were created to serve rural areas with basic banking and

financial services Financial services are the economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, accountancy companies, ...

. However, RRBs also have urban branches. The area of operation is limited to the area notified by the government of India covering, and it covers one or more districts in the State. RRBs perform various functions such as providing banking facilities to rural and semi-urban areas, carrying out government operations like disbursement of wages of

MGNREGA Mahatma Gandhi National Rural Employment Guarantee Act 2005 or MNREGA, earlier known as the National Rural Employment Guarantee Act or NREGA, is an Indian labour law and social security measure that aims to guarantee the 'right to work'. This a ...

workers and distribution of pensions, providing para-banking facilities like locker facilities, debit and credit cards, mobile banking, internet banking, and UPI services.

History

Regional Rural Banks were established under the provisions of an ordinance passed on 26 September 1975 and the RRB Act 1976 to provide sufficient banking and credit facility for agriculture and other rural sectors. As a result, five RRBs were set up on 2 October 1975 on the recommendations of the Narsimhan Committee on Rural Credit, during the tenure of Indira Gandhi's government. The purpose was to include rural areas into the economic mainstream since around 70% of the Indian population was rural. Prathama Bank, with head office in

Moradabad Moradabad () is a city, commissionary and municipal corporation in Moradabad district of Indian state of Uttar Pradesh. Moradabad is situated on the banks of the Ramganga river, at a distance of from the national capital, New Delhi and ...

, Uttar Pradesh was the first RRB. It was sponsored by Syndicate Bank and had an authorised capital of Rs. 5 crore. The other four RRBs were Gaur Gramin Bank (sponsored by UCO Bank), Gorakhpur Kshetriya Gramin Bank (sponsored by

State Bank of India State Bank of India (SBI) is an Indian multinational public sector bank and financial services statutory body headquartered in Mumbai, Maharashtra. SBI is the 49th largest bank in the world by total assets and ranked 221st in the '' Fort ...

), Haryana Kshetriya Gramin Bank (sponsored by Punjab National Bank), and Jaipur-Nagaur Anchalik Gramin Bank (sponsored by UCO Bank). The RRBs were owned by the central government, state government, and the sponsoring bank with 50%, 15%, and 35% shareholding respectively.

Recapitalization

A review of the RRBs in August 2009 by the Union Finance Minister revealed that a large number of RRBs had a low Capital to Risk weighted Assets Ratio (CRAR). A committee was constituted in September 2009 under the chairmanship of K C Chakrabarty, the deputy governor of the

Reserve Bank of India The Reserve Bank of India, chiefly known as RBI, is India's central bank and regulatory body responsible for regulation of the Indian banking system. It is under the ownership of Ministry of Finance, Government of India. It is responsible f ...

(RBI) to analyse the financials of the RRBs and suggest measures, including re-capitalisation to bring the CRAR of RRBs to at least 9% in a sustainable manner by 2012. The committee submitted its report in May 2010.Recapitalization of Regional Rural Banks (RRBs) to improve their Capital to Risk Weighted Assets Ratio (CRAR)
/ref> The committee recommended RRBs to have a CRAR of at least 7% on 31 March 2011 and at least 9% from 31 March 2012 onwards. The recapitalization requirement of Rs 2,200.00 crore for 40 of the 82 RRBs were to be released in two installments in 2010–11 and 2011–12. The remaining 42 RRBs will not require any capital and will be able to maintain CRAR of at least 9% as of 31 March 2012 and thereafter, on their own. A fund of ₹100 crore to be set up for training and capacity building of the RRB staff. The Government of India approved the recapitalization of the RRBs to improve their CRAR in the following manner: * Share of central government, that is, ₹1,100 crore will be released as per provisions made by the Department of Expenditure in 2010-11 and 2011–12. However, release of the funds will be contingent on proportionate release of the state government and sponsor bank share. * A capacity building fund with a corpus of ₹100 crore to be set up by central government with NABARD for training and capacity building of the RRB staff in the institution of NABARD and other reputed institutions. The functioning of the fund will be periodically reviewed by the central government. An action plan will be prepared by NABARD and sent to the government for approval. * An additional amount of ₹700 crore was set up as a contingency fund to meet the requirement of the weak RRBs, particularly those in the north-eastern and the eastern region.

Organizational structure

The organizational structure for RRB's varies from branch to branch and depends upon the nature and size of business done by the branch. The head office of an RRB normally had three to nine departments. The following is the decision making hierarchy of officials in a RRB. * Board of Directors * Chairman & Managing Director * General Manager * Assistant General Manager * Regional Manager/Chief Manager * Senior Manager * Manager * Officer * Office Assistant * Office Attendant

Amalgamation

RRBs periodically go through a process of amalgamation. In January 2013, 25 RRBs were amalgamated into 10 RRBs, totaling 67 RRBs. In March 2016, there were 56 RRBs, covering 525 districts with a network of 14,494 branches. As of 1 April 2020, there are 43 RRBs in India.

Legal significance

RRBs are recognized by the law and they have legal significance. The Regional Rural Banks Act, 1976 Act No. 21 Of 1976 February 1976.reads:

List of Regional Rural banks

There are 43 RRBs in since 1 April 2020. Andhra Pradesh * Andhra Pragathi Grameena Bank * Andhra Pradesh Grameena Vikas Bank *Chaitanya Godavari Gramin Bank *Saptagiri Gramin Bank Arunachal Pradesh *Arunachal Pradesh Rural Bank Assam * Assam Gramin Vikash Bank Bihar * Dakshin Bihar Gramin Bank * Uttar Bihar Gramin Bank Chhattisgarh *Chhattisgarh Rajya Gramin Bank Gujarat *Baroda Gujarat Gramin Bank *Saurashtra Gramin Bank Haryana *Sarva Haryana Gramin Bank Himachal Pradesh *Himachal Pradesh Gramin Bank Jammu and Kashmir *J&K Grameen Bank *Ellaquai Dehati Bank Jharkhand * Jharkhand Rajya Gramin Bank Karnataka * Karnataka Gramin Bank * Karnataka Vikas Grameena Bank Kerala *

Kerala Gramin Bank Kerala Gramin Bank (KGB) is a Regional Rural Bank (RRB), headquartered at Malappuram in Kerala, India. The bank is jointly owned by Central and State Governments & sponsored by Canara Bank. It is under the ownership of Ministry of Finance , ...

Madhya Pradesh * Madhyanchal Gramin Bank *Madhya Pradesh Gramin Bank Maharashtra *

Maharashtra Gramin Bank Maharashtra Gramin Bank is an Indian Regional Rural Bank (RRB) or Gramin bank, in the State of Maharashtra with its head office is in Aurangabad. It is one of the 43 Gramin banks in India supported by the government that aim to bring banking se ...

*Vidharbha Konkan Gramin Bank Manipur *Manipur Rural Bank Meghalaya *Meghalaya Rural Bank Mizoram * Mizoram Rural Bank Nagaland *Nagaland Rural Bank Odisha * Odisha Gramya Bank * Utkal Grameen Bank Puducherry * Puduvai Bharathiar Grama Bank Punjab *Punjab Gramin Bank Rajasthan *Baroda Rajasthan Kshetriya Gramin Bank *Rajasthan Marudhara Gramin Bank Tamil Nadu * Tamil Nadu Grama Bank Telangana *Telangana Grameena Bank Tripura * Tripura Gramin Bank Uttar Pradesh * Aryavart Bank * Prathama UP Gramin Bank *Baroda UP Bank Uttarakhand * Uttarakhand Gramin Bank West Bengal *

Paschim Banga Gramin Bank Paschim Banga Gramin Bank is a 'premier regional rural bank in India. It is under the ownership of Ministry of Finance , Government of India. It was established on 26 February 2007Government of India, Notification No.1/4/2006 – RRB dated 26 F ...

* Bangiya Gramin Vikash Bank * Uttarbanga Kshetriya Gramin Bank

References

{{Banking in India Types of business entity * Business organisations based in India Financial services in India Agricultural finance in India Banks established in 1975