Full Form of RRB (Regional Rural Bank)

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 various states of India. They basically serve the rural areas of the country 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 26^th September 1975 and the RRB Act, 1976. A total of five RRBs were set up on 2^nd 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 authorized capital of rupees 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 facilities to people belonging to rural areas, especially to farmers, artisans, labors, and small entrepreneurs. They are thus 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.

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

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 as well as 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.

Working

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

Importance

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.

Advantages

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 which can be utilized by people for running their trade and business.
The government can make use of such banks for running various incentives and schemes, especially for rural India.

Disadvantages

These banks have suffered from the following problems.

Their earning capacity remains low due to various kind of restrictions which are placed upon them by the government regarding their working and operations.
The operations of the regional rural banks 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.

Conclusion

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.