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Similarly, the bank lends to a person who needs money (investor/borrower) at an interest rate. They invest in equity shares and debentures of various companies listed in India. The main goal of this site is to provide study material, notes, in-depth analysis and other study-related resources that allow aspirants to achieve their goal. Structure and Functions of the Regional Rural Banks. Five regional rural banks were set up on October 2 with a total authorized capital of ` 1 crore, which later augmented to ` 5 crore. Structure and Functions of the Regional Rural Banks! Also, three other regional rural banks in the Northeast not under the sponsorship of SBI should be brought into the amalgamation scheme,' said A Sayeed Khan, secretary-general, All India Regional Rural Bank Employees Association. Carrying out government operations like disbursement of wages of MGNREGA workers, distribution of pensions etc. These Regional Rural Banks (RRBs) have been receiving a high degree of importance and attention in the rural credit system. The Government, in collaboration with NABARD, started a corpus building fund for the improvement of skills of the staff of RRBs with an initial corpus of Rs 100 crore. However, the functions of an RRB are limited to a specific area which is specified by the state. Development banks contribute the growth of capital markets. Through the process of Financial Intermediation, banks transform assets into liabilities. However they differ from commercial banks in the following aspects. RRBs were configured as hybrid micro banking institutions, combining the local orientation and small scale lending culture of the cooperatives and the business culture of commercial banks. are performed by RRBs. The RRB functions within the local limits as specified by government notification. Regional Rural Banks are the Scheduled Commercial banks in India conducting banking activities for the rural regions at the state level. 25 RRBs were established within a year from the passing of this Act. are also provided by RRBs in India. In such a case, there is a need for a separate banking system to, RRBs reduce farmers’ and the weaker sections’. Sponsor bank → 35%; Regional Rural Banks were conceived as low cost institutions having a rural ethos, local feel and pro poor focus. Development banks facilitate rural and regional development. Amalgamation of Regional Rural Banks. Cessation of business of transferor Regional Rural Banks. The chairman is appointed by the Central Government and his term of office does not exceed five years. Regional Rural Banks can be traced to the need for a stronger institutional arrangement for providing rural credit. Contribution to Capital Markets. Subs. Regional Rural Banks (RRBs) are scheduled Commercial banks (Government banks) operating at the regional level in different states of India. Depositors can also be made in fixed or recurring forms. After reading this article you will learn about the meaning and functions of local area banks.. 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. The first Regional Rural Bank “Prathama Grameen Bank” was set up on October 2, 1975. RRB is deal to be a cooperative society for the purpose of Income-Tax Act 1961. But Mint Road did one better: It allowed in a new participant, the regional rural banks. banks was the establishment of Regional Rural Banks in 1975 in different states with equity participation from commercial banks, Central and State Governments. They are also referred to as Grameen Banks/ Gramin Banks. … This move was to protect the farmers, local businessmen, trader, etc. 23. Each country has a central bank that regulates all the other banks in that particular country. Content Filtrations 6. Role of Regional Rural Banking for Rural Development: Regional Rural Banks were established with the following responsibilities in mind: 1) Taking the banking services to the doorstep of rural masses, particularly in hitherto unbanked rural areas. They also help the companies in project management in such less-developed areas. Several other banks, apart from the State Bank of India also functions as the promoter of rural development in India. Of the issued capital, 50 per cent is to be subscribed by the Central Government, 15 per cent by the concerned State Government and the rest 35 per cent by the sponsoring bank. Regional Rural Banks (RRBs) are the Indian scheduled commercial government banks operating at regional level in different states of India. Contribution to Capital Markets: The development bank contributes to the growth of capital markets. RRBs accept deposits from their members who hold an account in the bank. Five RRBs were first established on the occasion of Gandhi Jayanti, on October 2nd, 1975. Regional Rural Bank to be deemed to be a co-operative society for purpose of the Income-tax Act, 1961. Regional Rural Banks Banking Awareness PDF Download. Regional Rural Banks are a type of commercial banks in India. of India, the Government of concerned state and public sector bank, which sponsored it. Out of this total credit, 10% has to be given to the economically weaker sections. Regional Rural Banks are also scheduled banks. 100 cr. They basically serve the country’s rural areas and provide them with basic banking and other financial related services. Regional Rural Bank to be deemed to be a co-operative society for purpose of the Income-tax Act, 1961. Besides this these banks are making banking service available to the masses through their more than 18000 branches and a no of USBs. She is a blogger and a proud nature lover, looking to find fun-filled solutions out of problems. Commercial banks, as we know have no such restrictions they may open branches anywhere in … At to the end of June 1985, 183 Regional Rural Banks with a network of10, 245 branches have been opened in the states of the Indian Union. What is Recapitalisation? Regional Rural Banks were set up on the basis of the recommendations of the Narasimham Working Group (1975), and after the legislations of the Regional Rural Banks Act, 1976. 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 … Due to defaulting and non- repayment of loans, banks often run into debts. Regional rural banks are basically, banking organisation for local level operations across the States in India. They are Indian Government banks, being commercial banks, which operate at a regional level in India’s various states. Back in the late 20th century, banking was not equally distributed. They have been created to serve the rural areas with banking and financial services. Several other banks, apart from the State Bank of India also functions as the promoter of rural development in India. The idea of establishing rural banks was once again raised in the year 1975 as part of the Prime Ministers "20 Point Economic Programme".A "Working Group on Rural Banks" headed by Sri. The Regional Rural Banks (RRBs) aimed at providing credit and other facilities to the small and marginal farmers, agricultural labourers, artisans and small entrepreneurs in rural areas. 2) NABARD: It stands for National Bank for Agricultural and Rural Development of India is the chief body for regulating rural banking sector in India. Regional Rural Bank. Regional Rural Banks (RRBs) were set up as government-sponsored, regional based rural lending institutions under the Regional Rural Banks Act, 1976. There were five commercial banks, viz. … Prohibited Content 3. VERY NICE PRACHI… THE NOTES HELPED A LOT….. Save my name, email, and website in this browser for the next time I comment. Notification under section 23A to be sufficient notice to concerned parties. The important functions of Regional Rural Banks are discussed below. RRBs grant loans to small and marginal farmers, Agricultural labourers, Co-operative societies and to individuals including artisans, small entrepreneurs and persons of small means. RRBs were configured as hybrid micro banking institutions, combining the local orientation and small scale lending culture of the cooperatives and the business culture of commercial banks. The other Regional Rural Banks in India are -Haryana State Cooperative Apex Bank Limited . 25 lakhs; which is held by them in the proportion of 50, 15 and 35 per cent respectively. In 2010, it suggested many measures to increase the Capital to Risk-Weighted Assets Ratio (CRAR), one of them being recapitalisation of the banks. The authorised capital of an RRB is fixed at Rs. Regional Rural Banks (RRBs) 20. The Full Form of RRB stands for Regional Rural Bank. The Regional Rural Banks in India perform the important function of. The merging of two or more banks together is known as amalgamation. Interest-tax not payable. Answer (1 of 1): The functions of Cooperative Rural Banks are to facilitate credit flow for promotion and development of agriculture, small-scale industries,cottage industries,handicrafts and other rural crafts.They are also responsible for allied economic activities in rural areas and securing the prosperity of rural … credit functions, development functions, and supervisory functions. RRB's perform various functions in following heads • Providing banking facilities to rural and semi-urban areas. Privacy Policy 8. However, their area of operation may extend to some urban areas too. by Act 1 of 1988, s. 3, for sub-section (3) (w.e.f. The process of taking funds from the depositor and then lending them out to a borrower is known as Financial Intermediation. Regional Rural Banks Act, 1976; Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980; National Bank for Agriculture and Rural Development Act, 1981; National Housing Bank Act, 1987; Recovery of Debts Due to Banks and Financial Institutions Act, 1993; Competition Act, 2002; Indian Coinage Act, 2011: Governs currency and coins Just like any other commercial banks, the organisation of Regional Rural Bank comprises of a Board of Directors, Chairperson, Managing Director, Manager, Regional Managers, and the assistant’s staff. In January 2013, 25 RRBs were merged into ten banks, reducing the number to 67 banks in the first phase. They are created with a mandate to provide essential or basic banking and financial services to the rural areas. History of RRB. Before publishing your articles on this site, please read the following pages: 1. History of Regional Rural Banks: Regional Rural Banks were established under the provisions of an Ordinance passed in September 1975 and the Regional Rural Bank Act 1976 to provide sufficient banking and credit facility for agriculture and other rural sectors. The Chairman Meghalaya Rural Bank MTC Building, 2nd Floor Police Bazar Shillong - 793 001 Meghalaya Website: www.meghalayaruralbank.co.in : Mizoram; 27. Institutional credit for agriculture and Rural development in India, Fundamental Objectives the... Commercial banks and cooperative societies various RRBs ( AP ) local Language - Telugu )... Please read the following pages: 1 in urban areas too of operations RRB... Rural and semi-urban areas is to provide essential or basic banking and financial services to the of. 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