Regional Rural Banks

In the early 70s, there was a realisation that the even after nationalisation there were cultural issues which made it difficult for commercial banks, even under government ownership, to lend to farmers. To address this issue, the government set up a working group to suggest alternatives for institutional finances to the rural sector. Accepting the recommendations of the committee, the government promulgated the Regional Rural Banks Ordinanace on September 1975, which was replaced by the Regional Rural Banks Act 1976. The Act allowed the government to set up banks from time to time at places where it considers necessary. The RRBs were designed as unique financial institutions with exclusive focus on development of rural areas.Each bank carries on banking business within local limits specified by the government notification. The regional rural banks (RRBs) were owned by the central government, the state government and the sponsor bank who held shares in the ratio of 50,15 and 35%.  At present, there are 82 RRBs with a network of 15,475 branches.