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RRBs were set up as government-sponsored, regional based rural lending institutions under Regional Rural Banks Act, 1976.
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These are financial institutions which ensure adequate credit for agriculture and other rural sectors.
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They were set up on the basis of recommendations of Narasimhan Working Group.
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Objective:
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They have been created with a view to serve primarily rural areas of India with basic banking and financial services.
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They fulfill credit needs of relatively unserved sections in rural areas-small and marginal farmers, agricultural labourers and socio-economically weaker sections and small entrepreneurs in rural areas for development of agriculture, trade, commerce, industry and other productive activities.
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RRBs can also set branches set up for urban operations and their area of operation may include semi urban or urban areas too.
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Ownership:
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RRBs are jointly owned by Central Government, concerned State Government and Sponsor Banks with the issued capital shared in the proportion of 50%, 15% and 35% respectively.
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Priority Sector Lending: The RRBs are required to provide 75% of their total credit as priority sector lending(PSL).