The Regional Rural Banks Act, 1976
The Regional Rural Banks Act, 1976
Overview:
The Regional Rural Banks Act, 1976 was enacted by the Indian Parliament to establish Regional Rural Banks (RRBs) with the objective of promoting financial inclusion in rural areas. These banks were created to provide credit and other banking facilities, especially to small and marginal farmers, agricultural laborers, artisans, and small entrepreneurs in rural India.
Purpose:
The main aim of the Act was to bring banking services closer to rural communities and to ensure adequate flow of credit to the weaker sections of society for productive activities.
Key Features:
Establishment of RRBs: The Act provides for the creation of RRBs sponsored by a particular commercial bank.
Ownership Pattern: The ownership is shared by the Central Government (50%), the State Government (15%), and the sponsoring bank (35%).
Area of Operation: Each RRB operates in a specific region or district, focusing on rural development.
Functions: RRBs provide credit for agriculture, trade, commerce, industry, and other productive activities in rural areas.
Regulation: RRBs are regulated by the National Bank for Agriculture and Rural Development (NABARD).
Capital and Management: The authorized capital is determined by the government, and the RRBs have a board comprising representatives from the government, sponsor bank, and NABARD.
Importance:
Helps in financial inclusion by reaching remote rural areas.
Encourages rural economic development.
Supports government schemes for rural upliftment.
Summary Table: The Regional Rural Banks Act, 1976
| Aspect | Details |
|---|---|
| Year Enacted | 1976 |
| Purpose | To establish Regional Rural Banks to provide credit in rural areas to weaker sections |
| Ownership Structure | Central Government (50%), State Government (15%), Sponsoring Bank (35%) |
| Sponsoring Bank | Commercial banks sponsor RRBs for rural credit expansion |
| Area of Operation | Specific rural regions/districts |
| Regulatory Body | NABARD |
| Main Functions | Provide banking and credit facilities to agriculture, small industries, artisans, etc. |
| Significance | Promotes rural development and financial inclusion |
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