Regional Rural Bank

Regional Rural Banks (also RRBs) are local level banking organizations operating in different States of India. They have been created with a view to serve primarily the rural areas of India with basic banking and financial services. However, RRBs may have branches set up for urban operations and their area of operation may include urban areas too.

The area of operation of RRBs is limited to the area as notified by Government of India covering one or more districts in the State. RRBs also perform a variety of different functions. RRBs perform various functions in following heads • Providing banking facilities to rural and semi-urban areas. Carrying out government operations like disbursement of wages of MGNREGA workers, distribution of pensions etc. • Providing Para-Banking facilities like locker facilities, debit and credit cards.

History

Regional Rural Banks were established under the provisions of an Ordinance passed on September 1975 and the RRB Act. 1976 to provide sufficient banking and credit facility for agriculture and other rural sectors. These were set up on the recommendations of The M. Narasimham Working Group^[1] during the tenure of Indira Gandhi's government with a view to include rural areas into economic mainstream since that time about 70% of the Indian Population was of Rural Orientation. The development process of RRBs started on 2 October 1975 with the forming of the first RRB, the Prathama Bank with authorised capital of Rs. 5 crore at its starting. Also on 2 October 1976 five regional rural banks were set up with a total authorised capital Rs. 100 crore ($10 Million) which later augmented to 500 crore ($50 Million). The Regional Rural Bank were owned by the Central Government, the State Government and the Sponsor Bank(There were five commercial banks, Punjab National Bank, State Bank of India, Syndicate Bank, United Bank of India and United Commercial Bank, which sponsored the regional rural banks) who held shares in the ratios as follows Central Government-50%, State Government- 15% and Sponsor Banks- 35^[2]%.. Earlier, Reserve Bank of India had laid down ceilings on the rate of interest to be charged by these RRBs.

Recapitalization of Regional Rural Banks

Subsequent to review of the financial status of RRBs by the Union Finance Minister in August, 2009, it was felt that a large number of RRBs had a low Capital to Risk weighted Assets Ratio (CRAR). A committee was therefore constituted in September, 2009 under the Chairmanship of K C Chakrabarty, Deputy Governor, RBI to analyse the financials of the RRBs and to suggest measures including re-capitalisation to bring the CRAR of RRBs to at least 9% in a sustainable manner by 2012. The Committee submitted its report in May, 2010. The following points were recommended by the committee:

RRBs to have CRAR of at least 7% as of 31 March 2011 and at least 9% from 31 March 2012 onwards. recapitalisation requirement of Rs. 2,200.00 crore for 40 of the 82 RRBs. This amount is to be released in’ two installments in 2010-11 and 2011-12. .
The remaining 42 RRBs will not require any capital and will be able to maintain CRAR of at least 9% ifs on 31 st March 2012 and thereafter on their own.
A fund of Rs. 100 crore to be set up for training and capacity building of the RRB staff.

The Government of India recently approved the recapitalization of Regional Rural Banks (RRBs) to improve their Capital to Risk Weighted Assets Ratio CRAR) in the following manner:

Share of Central Government i.e. Rs.1, 100 crore will be released as per provisions made by the Department of Expenditure in 2010-11 and 2011-12. However, release of Government of India share will be contingent on proportionate release of State Government and Sponsor Bank share.
A capacity building fund with a corpus of Rs.100 crore to be set up by Central Government with NABARD for training and capacity building of the RRB staff in the institution of NABARD and other reputed institutions. The functioning of the Fund will be periodically reviewed by the Central Government. An Action Plan will be prepared by NABARD in this regard and sent to Government for approval.
Additional amount of Rs. 700 crore as contingency fund to meet the requirement of the weak RRBs, particularly those in the North Eastern. and Eastern Region, the necessary provision will be made in the Budget as and when the need arises.

Organizational Structure

The Organizational Structure for RRB's varies from branch to branch and depends upon the nature and size of business done by the branch. The Head Office of an RRB normally had three to seven departments.

The following is the decision making hierarchy of officials in a Regional Rural Bank.

Board of Directors
Chairman & Managing Director
General Manager
Chief Manager/Regional Managers
Senior Manager
Manager
Officer / Assist

Amalgamation

Currently, RRB's are going through a process of amalgamation and consolidation. 25 RRBs have been amalgamated in January 2013 into 10 RRBs. This counts 67 RRBs till the first week of June 2013. This counts 56 as of March 2015. On 31 March 2006, there were 133 RRBs (post-merger) covering 525 districts with a network of 14,494 branches. All RRBs were originally conceived as low cost institutions having a rural ethos, local feel and pro poor focus. However, within a very short time, most banks were making losses. The original assumptions as to the low cost nature of these institutions were belied. This may be again amalgamated in near future. At present there are 56 RRBs in India.

Legal Existence and Protection

RRB's are recognized by the law and they have legal significance.The Regional Rural Banks Act, 1976 Act No. 21 Of 1976 [9 February 1976.] reads

"For the incorporation, regulation and winding up of Regional Rural Banks with a view to developing the rural economy by providing, for the purpose of development of agriculture, trade, commerce, industry and other productive activities in the rural areas, credit and other facilities, particularly to the small and marginal farmers, agricultural laborers, artisans and small entrepreneurs, and for matters connected therewith and incidental thereto".

List of Regional Rural banks^[3]

Allahabad UP Gramin Bank,
Andhra Pradesh Grameena Vikas Bank,
Andhra Pragathi Grameena Bank,
Arunachal Pradesh Rural Bank,
Assam Gramin Vikash Bank,
Bangiya Gramin Vikash Bank,
Baroda Gujarat Gramin Bank,
Baroda Rajasthan Ksethriya Gramin Bank,
Baroda UP Gramin Bank,
Bihar Gramin Bank,
Central Madhya Pradesh Gramin Bank
Chaitanya Godavari Grameena Bank,
Chattisgarh Rajya Gramin Bank,
Dena Gujarat Gramin Bank,
Ellaquai Dehati Bank,
Gramin Bank Of Aryavrat,
Himachal Pradesh Gramin Bank,
Jammu And Kashmir Grameen Bank,
Jharkhand Gramin Bank,
Karnataka Vikas Grameena Bank,
Kashi Gomti Samyut Gramin Bank,
Kaveri Grameena Bank,
Kerala Gramin Bank,
Langpi Dehangi Rural Bank,
Madhya Bihar Gramin Bank,
Madhyanchal Gramin Bank,
Maharashtra Gramin Bank,
Malwa Gramin Bank,
Manipur Rural Bank,
Marudhara Rajasthan Gramin Bank,
Meghalaya Rural Bank,
Mizoram Rural Bank,
Nagaland Rural Bank,
Narmada Jhabua Gramin Bank
Odisha Gramya Bank,
Pallavan Grama Bank,
Pandyan Grama Bank,
Paschim Banga Gramin Bank,
Pragathi Krishna Gramin Bank,
Prathama Bank,
Puduvai Bharathiar Grama Bank,
Punjab Gramin Bank,
Purvanchal Bank,
Saptagiri Grameena Bank,
Sarva Haryana Gramin Bank,
Sarva UP Gramin Bank,
Saurashtra Gramin Bank,
Sutlej Gramin Bank,
Telangana Grameena Bank,
Tripura Gramin Bank,
Utkal Grameen Bank,
Uttar Bihar Gramin Bank,
Uttarakhand Gramin Bank
Uttarbanga Kshetriya Gramin Bank,
Vananchal Gramin Bank,
Vidharbha Konkan Gramin Bank,

References

Reserve Bank of India:http://www.rbi.org.in/scripts/AboutUsDisplay.aspx?pg=RegionalRuralBanks.htm
NABARD Website http://www.nabard.org/pdf/report_financial/Chap_V.pdf
AAPTGYAN http://aaptgyan.com/regional-rural-banks-conception-present-scenario#Regional_Rural_Banks_CONCEPTION_AND_THE_BRIEF_HISTORY_PRESENT_SCENARIO-1
NABARD DEPARTMENTS http://www.nabard.org/departments/rrbs.asp
Legal Existence of RBI http://indiacode.nic.in/fullact1.asp?tfnm=197621
Organizational Structure and Human Resource Management in RRB's: http://www.nabard.org/pdf/rrb/chap%205.pdf
indiankanoon.org/doc/857753
Speech from finance minister of India

Banking in India

Reserve bank	Reserve Bank of India

Public sector banks	Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Bharatiya Mahila Bank Canara Bank Central Bank of India Corporation Bank Dena Bank IDBI Bank Indian Bank Indian Overseas Bank Oriental Bank of Commerce Post Bank of India Punjab & Sind Bank Punjab National Bank State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of India State Bank of Mysore State Bank of Patiala State Bank of Travancore Syndicate Bank UCO Bank Union Bank of India United Bank of India Vijaya Bank

Private sector banks	Axis Bank Bandhan Bank Catholic Syrian Bank City Union Bank DCB Bank Dhanlaxmi Bank Federal Bank HDFC Bank ICICI Bank IDFC Bank IndusInd Bank Jammu & Kashmir Bank Karnataka Bank Karur Vysya Bank Kotak Mahindra Bank Lakshmi Vilas Bank Nainital Bank RBL Bank (Ratnakar Bank) South Indian Bank Tamilnad Mercantile Bank Limited Yes Bank

Cooperative banks	Buldhana Urban Cosmos Bank Repco Bank Saraswat Bank Shamrao Vithal Co-op. Bank TNSC Bank Rajkot Nagrik Sahakari Bank

Foreign banks	ABN AMRO Abu Dhabi Commercial Bank Antwerp Diamond Bank Australia and New Zealand Banking Group Bank Internasional Indonesia Bank of America Bank of Bahrain and Kuwait Bank of Ceylon The Bank of Tokyo-Mitsubishi UFJ Barclays Citibank India Credit Suisse Deutsche Bank HSBC The Royal Bank of Scotland Scotiabank Standard Chartered

Regional Rural Banks	Andhra Pragathi Grameena Bank Kerala Gramin Bank Bangiya Gramin Vikash Bank Gramin Bank of Aryavart North Malabar Gramin Bank Pallavan Grama Bank Pandyan Grama Bank Paschim Banga Gramin Bank Sarva UP Gramin Bank South Malabar Gramin Bank Uttar Bihar Gramin Bank Vananchal Gramin Bank List of regional rural banks in Uttar Pradesh

Interbank networks	BANCS Cashnet Cirrus IMPS UPI MITR NFS PLUS RuPay

Defunct banks	Alliance Bank of Simla Arbuthnot & Co Bank of Bombay Bank of Calcutta Bank of Chettinad Bank of Cochin Bank of Hindostan Bank of Madras Bank of Madura Bank of Rajasthan Bank of Thanjavur Bareilley Corporation Bank Bengal Central Bank Bharat Overseas Bank Centurion Bank of Punjab Chartered Bank of India, Australia and China Commercial Bank of India Dass Bank Exchange Bank of India & Africa Global Trust Bank Grindlays Bank Hindustan Commercial Bank Imperial Bank of India ING Vysya Bank Lakshmi Commercial Bank Lord Krishna Bank Madhavpura Mercantile Cooperative Bank Mercantile Bank of India, London and China Miraj State Bank Nath Bank Nedungadi Bank New Bank of India Oriental Bank Corporation Oudh Commercial Bank Palai Central Bank Pandyan Bank Sikkim Bank State Bank of Indore State Bank of Saurashtra Times Bank United Industrial Bank United Western Bank

Related topics	Banks Board Bureau Banking Codes and Standards Board of India ATM usage fees in India De-Materialisation (DEMAT) Foreign Exchange (FOREX) Indian Financial System Code (IFSC) List of banks in India National Electronic Fund Transfer (NEFT) National Payments Corporation of India Real Time Gross Settlement (RTGS) Structured Financial Messaging System (SFMS) Prepaid Payment Instruments in India

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