Full Form of RRB

Full Form of RRB – Regional Rural Bank

The Full Form of RRB stands for Regional Rural Bank. They are Indian Government banks, being commercial banks, which operate at a regional level in India’s various states. They basically serve the country’s rural areas and provide them with basic banking and other financial related services. However, their area of operation may extend to some urban areas too.

History of RRB

The establishment of RRBs finds its route from Ordinance passed on 26th September 1975 and the RRB Act, 1976. A total of five RRBs were set up on 2nd October 1975. These banks were established following the recommendations of The Narshimham Committee Working Group. First RRB, named Prathama Bank, having its Head Office at Moradabad (U.P.) and sponsored by Syndicate Bank, was set up with rupees’ authorized capital five crores. RRBs are being owned by the Central Government (50%), State Government (15%), and respective sponsor bank (35%).

Role of RRB

Regional rural banks play a very important role in the development of rural areas of the country. The main reason why such banks were set up was to provide banking and credit-related facilitiesCredit-related FacilitiesCredit Facility is a pre-approved bank loan facility to businesses allowing them to borrow the capital amount as & when needed for their long-term/short-term requirements without having to re-apply for a loan each time. read more to people belonging to rural areas, especially to farmers, artisans, laborers, and small entrepreneurs. Thus, they are responsible for the overall development of such rural areas by allowing proper flow of credit facilities and limiting the cash flows from rural to urban areas.


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Objectives of RRB

RRBs were set up with the following set of objectives.

  • To overcome the credit gaps that are prevailing in rural areas.
  • To restrict the flow of cash from rural to urban areas by adopting necessary policies and measures.
  • To generate employment opportunities in rural areas.


Functions of RRB

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  • To provide basic banking facilities to rural and semi-urban areas.
  • To give effect to some governmental functions such as disbursal of wages under MGNREGA policy.
  • To provide other bank-related facilities such as locker facility, internet banking, mobile banking, debit a credit card, etc.
  • To grant credit facilities to people belonging to rural areas such as small farmers, artisans, small entrepreneurs, and so on.
  • To accept deposits from people.


These banks, overall affairs are managed by a Board of Directors, which consists of one Chairman, three directors as nominated by the Central Government, maximum of two directors as nominated by the concerned State Government, and a maximum of three directors as nominated by the sponsor bank.


The importance of Regional rural Banks lies in the fact that they have been able to uplift the rural sections of the society by catering to their banking and financial needs. They provide loans for crops, other agricultural activities, for artisans and cottage industries, small businesses, etc. Further, they have also been advancing loan facilities to differently-abled persons and weaker sections of society.


  • Regional Rural Banks help in the overall development of rural areas in the country.
  • They generate employment opportunities in such areas.
  • They uplift the economy of rural areas by providing them with credit facilities that people can utilize for running their trade and business.
  • The government can use such banks to run various incentives and schemes, especially for rural India.


These banks have suffered from the following problems.

  • Their earning capacity remains low due to various kinds of restrictions placed upon them by the government regarding their working and operations.
  • The regional rural banks’ operations remain very limited, which acts as a geographical barrier for them.
  • They face problems in recovery of the money due to them.
  • They suffer from capital inadequacy.


Regional Rural Banks intend to provide credit facilities to the rural and semi-urban sectors. They have helped the government with their idea to help rural India with their financial needs and also to give effect to various government schemes.

Recommended Articles

This has been a guide to the Full Form of RRB and its definition. Here we discuss the role, objectives, functions of Regional Rural Bank along with its working, advantages, and disadvantages. You may refer to the following articles to learn more about finance –