3. Establishment and incorporation of Regional Rural Banks.—(1) The Central Government may,
if requested so to do by a Sponsor Bank, by notification in the Official Gazette, establish in a State or
Union territory, one or more Regional Rural Banks with such name as may be specified in the notification
and may, by the said or subsequent notification, specify the local limits within which each Regional Rural
Bank shall operate.
(2) Every Regional Rural Bank shall be a body corporate with perpetual succession and a common
seal with power, subject to the provisions of this Act, to acquire, hold and dispose of property and to
contract and may sue and be sued in its name.
1
[(3) It shall be the duty of the Sponsor Bank to aid and assist the Regional Rural Bank, sponsored by
it, by—
(a) subscribing to the share capital of such Regional Rural Bank;
(b) training personnel of such Regional Rural Bank; and
(c) providing such managerial and financial assistance to such Regional Rural Bank 2
***, as may
be mutually agreed upon between the Sponsor Bank and the Regional Rural Bank:
3
* * * * *]
4. Offices and agencies.—(1) A Regional Rural Bank shall have its head office at such place in the
notified area as the Central Government may, after consultation with the 4
[National Bank] and the
Sponsor Bank, specify by notification in the Official Gazette.
(2) A Regional Rural Bank may, if it is of opinion that it is necessary so to do, establish its branches
or agencies at any place in the notified area.
5. Authorised capital.—The authorised capital of each Regional Rural Bank shall be 5
[two thousand
crore of rupees, divided into two hundred crore of fully paid-up shares of ten rupees each]:
Provided that the Central Government may, after consultation with the 6
[National Bank] and the
Sponsor Bank, increase or reduce such authorised capital; so, however, that the authorised capital shall
not be reduced below 7
[one crore of rupees, and the shares shall be, in all cases, fully paid-up shares of
ten rupees each].
6. Issued capital.—8
[(1) The issued capital of each Regional Rural Bank shall, in the first instance,
be such as may be fixed by the Central Government in this behalf, but it shall in no case be less than 9
[one
9
[one crore of rupees].]
(2) Of the capital issued by a Regional Rural Bank under sub-section (1), fifty per cent. shall
be subscribed by the Central Government; fifteen per cent. by the concerned State Government and
thirty-five per cent. by the Sponsor Bank.
10[Provided that in case the Regional Rural Bank raises its capital from sources other than the Central
Government or the State Government or the Sponsor Bank, the shareholding of the Central Government
and the Sponsor Bank shall not be less than fifty-one per cent.:
Provided further that the Central Government shall consult the concerned State Government if the
level of shareholding in the Regional Rural Bank of such State Government is reduced below fifteen
per cent.]
1. Subs. by Act 1 of 1988, s. 3, for sub-section (3) (w.e.f. 28-9-1988).
2. The words “during the first five years of its functioning” omitted by Act 14 of 2015, s. 2 (w.e.f. 4-2-2016).
3. The proviso omitted by s. 2, ibid. (w.e.f. 4-2-12016).
4. Subs. by Act 1 of 1988, s. 4, for “Reserve Bank” (w.e.f. 28-9-1988).
5. Subs. by Act 14 of 2015, s. 3, for “five crores of rupees divided into five lakhs of fully paid-up shares of one hundred
rupees each” (w.e.f. 4-2-2016).
6. Subs. by Act 1 of 1988, s. 5, for “Reserve Bank” (w.e.f. 28-9-1988).
7. Subs. by Act 14 of 2015, s. 3, for “twenty-five lakhs of rupees, and the shares shall be, in all cases, fully paid-up shares of
one hundred rupees each” (w.e.f. 4-2-2016).
8. Subs. by Act 1 of 1988, s. 6, for sub-section (1) (w.e.f. 28-9-1988).
9. Subs. by Act 14 of 2015, s. 4, for “twenty-five lakhs of rupees or exceed one crore of rupees” (w.e.f. 4-2-2016).
10. Ins. by s. 4, ibid. (w.e.f. 4-2-2016).
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1
[(2A) The Central Government may, in consultation with the Sponsor Bank and the State
Government, by notification, either raise or reduce the limit of shareholding of the Central Government,
the State Government or the Sponsor Bank specified in sub-section (2):
Provided that the Central Government shall consult the concerned State Government before reducing
the limit of shareholding of such State Government.]
(3) The Board may, after consultation with the 2
[National Bank], the concerned State Government
and the Sponsor Bank and with the prior approval of the Central Government, from time to time, increase
the issued capital of the Regional Rural Bank; and, where additional capital is issued, such capital shall
also be subscribed in the same proportion as is specified in sub-section (2)
1
[or, as the case may be,
notified by the Central Government under sub-section (2A)].
7. Shares to be approved securities.—Notwithstanding anything contained in the Acts hereinafter
mentioned in this section, the shares of a Regional Rural Bank shall be deemed to be included among the
securities enumerated in section 20 of the Indian Trusts Act, 1882 (2 of 1882), and shall also be deemed
to be approved securities for the purposes of the Banking Regulation Act, 1949 (10 of 1949).