Full Form of RRB

Updated on March 19, 2024
Article byNiti Gupta
Edited byNiti Gupta
Reviewed byDheeraj Vaidya, CFA, FRM

Full Form of RRB – Regional Rural Bank

The full form of RRB stands for Regional Rural Bank. They are Indian government and commercial banks which operate at a regional level in India’s various states. They 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 the 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 are established following the recommendations of The Narasimham 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 of five crores. The Central Government (50%) owns RRBs, State Government (15%), and respective sponsor banks (35%).

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Role of RRB

Regional rural banks play a very important role in developing rural areas of the country. The main reason for setting up such banks was to provide banking and credit-related facilities to people in rural areas, especially farmers, artisans, laborers, and small entrepreneurs. Thus, they are responsible for developing 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

They set up RRBs with the following objectives:

  • First, to overcome the credit gaps that are prevailing in rural areas.
  • Second, to restrict cash flow from rural to urban areas by adopting necessary policies and measures.
  • Third, 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 effect 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.
  • Grant credit facilities to people in rural areas, such as small farmers, artisans, small entrepreneurs, etc.
  • To accept deposits from people.


The Board of Directors, manages these banks, overall affairs, which consists of one Chairman, three Directors as nominated by the Central Government, a 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 their ability to uplift the rural sections of society by catering to their banking and financial needs. They provide loans for crops, other agricultural activities, 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 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 restrictions placed upon them by the government regarding their working and operations.
  • The Regional Rural Banks’ operations remain very limited, a geographical barrier for them.
  • They face problems in the recovery of the money due to them.
  • They suffer from capital inadequacy.


The 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 article guides the Full Form of RRB and its definition. Here, we discuss the role, objectives, and functions of Regional Rural Bank, its working, advantages, and disadvantages. You may refer to the following articles to learn more about finance: –