Regional Rural Bank, Check Functions of RRB in India

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Regional Rural Bank

Regional Rural Banks in India: Regional Rural Banks are the banks that work at the state level for the financial benefit of rural and agriculture sectors. These banks are located all over India and work in the different regions of the states. These are one of the most trusted banks for rural people to have financial support. In this blog, we will provide you with the details of the Regional rural banks and their functions.

Questions related to regional rural banks are often asked in various banking exams. It is one of the important topics for candidates preparing for any banking exams.

What are Regional Rural Banks (RRB)?

Regional Rural Banks are a form of commercial banks which functions at the regional level. The major stakes of these banks are owned by the government. These banks mostly cater the loans and financial support for rural people, small farmers, small artisans, and people with unorganized employment in rural area.

They also work as a branch of the banking service of national banks. So, they can provide banking services in rural areas.

Who Regulates RRB in India?

RRBs in India are primarily regulated by RBI (Reserve Bank of India) and NABARD (National Bank for Agricultural and Rural Development). RBI regulates any bank that performs commercial activities which makes it a regulator for RRBs.

Whereas NABARD regulates any bank associated with the services for the rural and agricultural sectors. NABARD regulates the schemes of the RRBs for rural and agricultural sector.

Ownership of Regional Rural Banks (RRB)

Regional Rural Banks’ stakes are owned by the central government, state government, and sponsor banks. The equity of all the regional rural banks is divided equally among all the owners. The ratio of equity is divided among all three owners as follows:

  • State Government owns 15% of stakes
  • 35% stakes are owned by Sponsor Banks
  • Central Government owns 50% stakes

List of Regional Rural Banks in India

In January 2013, the merger of 25 RRBs into 10 banks decreased their count from 190 to 67. In the second phase in March 2016, the number further dropped to 56. Subsequently, in the third phase, additional mergers reduced the count to 43. Presently, the country operates with 43 RRBs. The name of these 43 RRBs are as follows:

Name of Regional Rural BankSponsor BankState
Andhra Pragathi Grameena BankCanara BankAndhra Pradesh
Chaitanya Godavari Grameena BankUnion Bank of IndiaAndhra Pradesh
Saptagiri Grameena BankIndian BankAndhra Pradesh
Arunachal Pradesh Rural BankState Bank of IndiaArunachal Pradesh
Assam Gramin Vikash BankPunjab National BankAssam
Dakshin Bihar Gramin BankPunjab National BankBihar
Uttar Bihar Gramin BankCentral Bank of IndiaBihar
Chhattisgarh Rajya Gramin BankState Bank of IndiaChhattisgarh
Baroda Gujarat Gramin BankBank of BarodaGujarat
Saurashtra Gramin BankState Bank of IndiaGujarat
Sarva Haryana Gramin BankPunjab National BankHaryana
Himachal Pradesh Gramin BankPunjab National BankHimachal Pradesh
Ellaquai Dehati BankState Bank of IndiaJammu & Kashmir
J&K Grameen BankJ&K Bank Ltd.Jammu & Kashmir
Jharkhand Rajya Gramin BankState Bank of IndiaJharkhand
Karnataka Gramin BankCanara BankKarnataka
Karnataka Vikas Grameena BankCanara BankKarnataka
Kerala Gramin BankCanara BankKerala
Madhya Pradesh Gramin BankBank of IndiaMadhya Pradesh
Madhyanchal Gramin BankState Bank of IndiaMadhya Pradesh
Maharashtra Gramin BankBank of MaharashtraMaharashtra
Vidharbha Konkan Gramin BankBank of IndiaMaharashtra
Manipur Rural BankPunjab National BankManipur
Meghalaya Rural BankState Bank of IndiaMeghalaya
Mizoram Rural BankState Bank of IndiaMizoram
Nagaland Rural BankState Bank of IndiaNagaland
Odisha Gramya BankIndian Overseas BankOdisha
Utkal Grameen BankState Bank of IndiaOdisha
Puduvai Bharthiar Grama BankIndian BankPuducherry
Punjab Gramin BankPunjab National BankPunjab
Baroda Rajasthan Kshetriya Gramin BankBank of BarodaRajasthan
Rajasthan Marudhara Gramin BankState Bank of IndiaRajasthan
Tamil Nadu Grama BankIndian BankTamil Nadu
Andhra Pradesh Grameena Vikas BankState Bank of IndiaTelangana
Telangana Grameena BankState Bank of IndiaTelangana
Tripura Gramin BankPunjab National BankTripura
Aryavart BankBank of IndiaUttar Pradesh
Baroda UP BankBank of BarodaUttar Pradesh
Prathama UP Gramin BankPunjab National BankUttar Pradesh
Uttarakhand Gramin BankState Bank of IndiaUttarakhand
Bangiya Gramin Vikash BankPunjab National BankWest Bengal
Paschim Banga Gramin BankUCO BankWest Bengal
Uttar Banga Kshetriya Gramin BankCentral Bank of IndiaWest Bengal

Objectives of Regional Rural Banks in India

Regional Rural Banks have various objectives and you must have proper information regarding their objectives. The objectives of regional rural banks are as follows:

  1. Providing Banking Services in Rural Areas: Bringing banking facilities to remote regions, ensuring people have access to financial services without traveling long distances.
  2. Creating Financial Awareness: Educating rural residents on the importance of saving, maintaining financial stability, and understanding available banking programs.
  3. Loans and Assistance for Agriculture and Rural Sectors: Offering financial support to agricultural endeavors, small farmers, rural communities, and artisans through loans and assistance programs.
  4. Low-Interest Rate Loans in Rural Areas: Making loans accessible in rural regions at lower interest rates, making financial resources more affordable for the local population.
  5. Generating Employment Opportunities: Initiating projects and programs that create job opportunities in rural areas, contributing to local economic development.
  6. Protection from Money Lenders: Safeguarding individuals in rural communities from exploitation by money lenders, offering a secure and regulated financial alternative.

Features of Regional Rural Banks in India

Regional Rural Banks are basically a commercial banks that provide services to rural and agricultural sector. RRBs have various functions to perform for their commercial and rural area services. The functions of regional rural banks are as follows:

1. Giving Loans

The major and primary function of any regional rural bank is to provide loans to the people of rural areas & agricultural sector. They also provides different schemes to give financial assistance for any materialistic developmetn.

2. Creating Awareness

RRBs are also responsible for creating awareness regarding finance, banking services, and money-saving among the people of rural area.

3. Providing Wages

Regional Rural banks are the responsible authority to provide wages to the labourers that are working under any government schemes like MANREGA. They also disburse pensions to the rural people.

Difference Between RRBs & Commercial Banks

FeatureRegional Rural Banks (RRBs)Commercial Banks
Focus AreaPrimarily rural and agricultural areasDiverse, covering urban and rural areas
OwnershipJointly owned by the Government of India, State Government, and Sponsor BankOwned by private individuals or shareholders, or by the government (in the case of public sector banks)
FormationEstablished to promote rural development and financial inclusionFormed with the primary aim of profit-making and providing financial services to a wider customer base
RegulationGoverned by the National Bank for Agriculture and Rural Development (NABARD) and the respective State GovernmentsRegulated by the Reserve Bank of India (RBI) and governed by the Banking Regulation Act, 1949
Capital StructureStructured into various categories of share capital, with the majority held by the government and sponsor banksGenerally structured with a mix of equity and debt, with shareholders holding ownership stakes
Services OfferedFocus on agriculture and rural credit, offering financial services like crop loans, farm loans, and rural development programsProvide a wide range of services, including corporate and retail banking, investment banking, and international banking
Branch NetworkConcentrated in rural and semi-urban areasPresence in urban, semi-urban, and rural areas, catering to a diverse customer base
Risk ExposureMore exposure to agricultural and rural economic factors, subject to the volatility of rural activitiesDiverse risk exposure, including market risks, credit risks, and operational risks
Profit MotiveWhile profitability is a consideration, the primary focus is on rural development and financial inclusionProfitability is a core objective, and the bank aims to maximize returns for shareholders
Target Customer BasePrimarily rural and agricultural communities, with an emphasis on small and marginal farmersDiverse customer base, including individuals, businesses, and corporations across various sectors
Deposit InsuranceCovered by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to a specified limitAlso covered by DICGC, providing deposit insurance up to a certain limit
Examples in IndiaExamples include banks like Punjab Gramin Bank, Baroda Rajasthan Kshetriya Gramin Bank, etc.Examples include State Bank of India, HDFC Bank, ICICI Bank, etc.

Frequently Asked Questions

Q1. What are Regional Rural Banks?

Ans. Regional Rural Banks are the commercial banks that function in the regional area for rural and agricultural sector.

Q2. How many RRBs are there in India?

Ans. Currently, there are 56 RRBs operating in India.

Q3. Who owns most of the equity in Regional rural banks?

Ans. Central Government owns 50% equity of regional rural banks.

Q4. Who regulates the Regional Rural Banks?

Ans. RBI and NABARD regulate the regional rural banks.


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