REGIONAL RURAL BANKS
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REGIONAL RURAL BANKS
Which committees recommended setting up RRBs?
An RRB Ordinance was promulgated in Sep 1975, which was replaced by the Regional Rural Banks Act 1976 on the recommendation of Narasimham Working Group set up in 1975.
In which category do RRBs fall?
Banks in India can be broadly classified under two heads — commercial banks and co-operative banks. The nationalised banks, State Bank group, private sector banks, foreign banks and RRBs are commercial banks.
When was the first RRB set up?
The first Regional Rural Bank, Prathama Grameen Bank, was set up on Oct 2, 1975.
What is the ownership ratio of stakeholders in the RRBs?
The RRBs are jointly owned by the Govt of India, the concerned State Govt and Sponsor Banks (27 Scheduled Commercial Banks and one State Cooperative Bank) in the following proportions: Central govt – 50 per cent State govt – 15 per cent Sponsor bank – 35 per cent
What is the operational area of RRBs?
The area of operation of the majority of RRBs is limited to a notified area comprising a few districts in the States. The RRBs grant loans and advances mostly to small and marginal farmers, agricultural labourers and rural artisans.
What is the function of sponsor banks?
The RRB Act, 1976 provides for RRBs to be sponsored by banks. These sponsor banks are required to: subscribe to the share capital of RRBs; train their personnel; and provide managerial and financial assistance.
Who regulates RRBs?
The RRBs are regulated by National Bank for Agriculture and Rural Development (NABARD).
What is the total number of RRBs as of now?
At present there are 56 RRBs and they are doing well.
The RRBs are NOT present in which states?
Goa and Sikkim have no RRBs as of now.
What are state-level RRBs?
In Nov 2011, the govt had said that geographically contiguous RRBs within a state could be amalgamated to form a single state level RRB. The amalgamation will create large state-level RRBs, which would help optimise resources, achieve economies of scale and common technology platform. The states in which the state-level RRBs are likely to be formed include Assam, Uttaranchal, Jharkhand, Chhattisgarh, Kerala, Tamil Nadu, Himachal Pradesh, Haryana, Jammu & Kashmir and Punjab. Typically, RRBs with less than 100 branches are being merged under the process of amalgamation. At present, seven states, which includes Tripura, Nagaland, Manipur, Mizoram, Arunachal Pradesh, Meghalaya and Puducherry, have state-level RRBs. Apart from this, states of Gujarat and Karnataka too have demanded formation of state level RRB.
What changes have been brought by Regional Rural Banks (Amendment) Bill, 2014?
The Regional Rural Banks (Amendment) Bill, 2014, was passed by the Lok Sabha on 22 Dec 2014 and by the Rajya Sabha on 28 Apr 2015. Changes are as follows:
The amendment raised the authorised capital of the RRBs from Rs 5 cr to Rs 2,000 cr to strengthen these institutions and further deepen financial inclusion.
The combined capital of the Centre, State Govt and Sponsor Banks will not come down below 51 per cent.
The State Govts would be free to raise their contribution in the RRBs to over 15 per cent, which is allowed under the existing provisions.
As per the provisions of the bill, the share capital of the RRBs could be split into 200 cr equity shares of Rs 10 each. As per the existing Act, the Rs 5 cr share capital of RRBs is split into 5 lakh shares of Rs 100 each.
Important news related to RRBs
The combined capital of the Centre, State Govt and Sponsor Banks will not come down below 51 per cent.
The State Govts would be free to raise their contribution in the RRBs to over 15 per cent, which is allowed under the existing provisions.
As per the provisions of the bill, the share capital of the RRBs could be split into 200 cr equity shares of Rs 10 each. As per the existing Act, the Rs 5 cr share capital of RRBs is split into 5 lakh shares of Rs 100 each.
Important news related to RRBs
The Govt on 16 Jul 2015 sanctioned an additional Rs 700 cr for the recapitalisation of weak RRBs and extended the validity period for fund infusion to 2016-17.
These banks are unable to maintain their minimum Capital to Risk weighted Assets Ratio (CRAR) of 9 per cent. Presently, there is a Budget provision of Rs 15 cr for recapitalisation of RRBs.
With a view to bringing the CRAR of RRBs to at least 9 per cent, the KC Chakrabarty Committee recommended recapitalisation support to the extent of `2,200 cr to 40 RRBs in 21 States. The recapitalisation process started in 2010-11.
National Payments Corporation of India (NPCI) on 27 Mar is said to have enabled all 56 regional rural banks under its central payment systems network with RuPay cards and access to National Automated Clearing House service.
With this, 12 cr customers at 19,000 bank branches of all 56 RRBs would be part of the national network of electronic payment systems.
Based on the recommendations of SK Mitra committee on HR policy for RRBs, the Central Govt has directed RRBs to become slim by cutting jobs and outsource noncore functions such as IT maintenance, cash remittance and house-keeping.
To ensure fair selection process in RRBs, the govt said the Institute of Banking Personnel Selection (IBPS) will handle all direct recruitments for these banks.
The govt also raised the age limit by two years from 28 to 30 for candidates applying for Officers Scale-I posts.
The South Malabar Gramin Bank (SMGB) based in Malappuram near Kozhikode is the first fully computerised RRB in the country.
These banks are unable to maintain their minimum Capital to Risk weighted Assets Ratio (CRAR) of 9 per cent. Presently, there is a Budget provision of Rs 15 cr for recapitalisation of RRBs.
With a view to bringing the CRAR of RRBs to at least 9 per cent, the KC Chakrabarty Committee recommended recapitalisation support to the extent of `2,200 cr to 40 RRBs in 21 States. The recapitalisation process started in 2010-11.
National Payments Corporation of India (NPCI) on 27 Mar is said to have enabled all 56 regional rural banks under its central payment systems network with RuPay cards and access to National Automated Clearing House service.
With this, 12 cr customers at 19,000 bank branches of all 56 RRBs would be part of the national network of electronic payment systems.
Based on the recommendations of SK Mitra committee on HR policy for RRBs, the Central Govt has directed RRBs to become slim by cutting jobs and outsource noncore functions such as IT maintenance, cash remittance and house-keeping.
To ensure fair selection process in RRBs, the govt said the Institute of Banking Personnel Selection (IBPS) will handle all direct recruitments for these banks.
The govt also raised the age limit by two years from 28 to 30 for candidates applying for Officers Scale-I posts.
The South Malabar Gramin Bank (SMGB) based in Malappuram near Kozhikode is the first fully computerised RRB in the country.
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