Regional Rural Bank, Check Functions of RRB in India

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 Bank	Sponsor Bank	State
Andhra Pragathi Grameena Bank	Canara Bank	Andhra Pradesh
Chaitanya Godavari Grameena Bank	Union Bank of India	Andhra Pradesh
Saptagiri Grameena Bank	Indian Bank	Andhra Pradesh
Arunachal Pradesh Rural Bank	State Bank of India	Arunachal Pradesh
Assam Gramin Vikash Bank	Punjab National Bank	Assam
Dakshin Bihar Gramin Bank	Punjab National Bank	Bihar
Uttar Bihar Gramin Bank	Central Bank of India	Bihar
Chhattisgarh Rajya Gramin Bank	State Bank of India	Chhattisgarh
Baroda Gujarat Gramin Bank	Bank of Baroda	Gujarat
Saurashtra Gramin Bank	State Bank of India	Gujarat
Sarva Haryana Gramin Bank	Punjab National Bank	Haryana
Himachal Pradesh Gramin Bank	Punjab National Bank	Himachal Pradesh
Ellaquai Dehati Bank	State Bank of India	Jammu & Kashmir
J&K Grameen Bank	J&K Bank Ltd.	Jammu & Kashmir
Jharkhand Rajya Gramin Bank	State Bank of India	Jharkhand
Karnataka Gramin Bank	Canara Bank	Karnataka
Karnataka Vikas Grameena Bank	Canara Bank	Karnataka
Kerala Gramin Bank	Canara Bank	Kerala
Madhya Pradesh Gramin Bank	Bank of India	Madhya Pradesh
Madhyanchal Gramin Bank	State Bank of India	Madhya Pradesh
Maharashtra Gramin Bank	Bank of Maharashtra	Maharashtra
Vidharbha Konkan Gramin Bank	Bank of India	Maharashtra
Manipur Rural Bank	Punjab National Bank	Manipur
Meghalaya Rural Bank	State Bank of India	Meghalaya
Mizoram Rural Bank	State Bank of India	Mizoram
Nagaland Rural Bank	State Bank of India	Nagaland
Odisha Gramya Bank	Indian Overseas Bank	Odisha
Utkal Grameen Bank	State Bank of India	Odisha
Puduvai Bharthiar Grama Bank	Indian Bank	Puducherry
Punjab Gramin Bank	Punjab National Bank	Punjab
Baroda Rajasthan Kshetriya Gramin Bank	Bank of Baroda	Rajasthan
Rajasthan Marudhara Gramin Bank	State Bank of India	Rajasthan
Tamil Nadu Grama Bank	Indian Bank	Tamil Nadu
Andhra Pradesh Grameena Vikas Bank	State Bank of India	Telangana
Telangana Grameena Bank	State Bank of India	Telangana
Tripura Gramin Bank	Punjab National Bank	Tripura
Aryavart Bank	Bank of India	Uttar Pradesh
Baroda UP Bank	Bank of Baroda	Uttar Pradesh
Prathama UP Gramin Bank	Punjab National Bank	Uttar Pradesh
Uttarakhand Gramin Bank	State Bank of India	Uttarakhand
Bangiya Gramin Vikash Bank	Punjab National Bank	West Bengal
Paschim Banga Gramin Bank	UCO Bank	West Bengal
Uttar Banga Kshetriya Gramin Bank	Central Bank of India	West 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

Feature	Regional Rural Banks (RRBs)	Commercial Banks
Focus Area	Primarily rural and agricultural areas	Diverse, covering urban and rural areas
Ownership	Jointly owned by the Government of India, State Government, and Sponsor Bank	Owned by private individuals or shareholders, or by the government (in the case of public sector banks)
Formation	Established to promote rural development and financial inclusion	Formed with the primary aim of profit-making and providing financial services to a wider customer base
Regulation	Governed by the National Bank for Agriculture and Rural Development (NABARD) and the respective State Governments	Regulated by the Reserve Bank of India (RBI) and governed by the Banking Regulation Act, 1949
Capital Structure	Structured into various categories of share capital, with the majority held by the government and sponsor banks	Generally structured with a mix of equity and debt, with shareholders holding ownership stakes
Services Offered	Focus on agriculture and rural credit, offering financial services like crop loans, farm loans, and rural development programs	Provide a wide range of services, including corporate and retail banking, investment banking, and international banking
Branch Network	Concentrated in rural and semi-urban areas	Presence in urban, semi-urban, and rural areas, catering to a diverse customer base
Risk Exposure	More exposure to agricultural and rural economic factors, subject to the volatility of rural activities	Diverse risk exposure, including market risks, credit risks, and operational risks
Profit Motive	While profitability is a consideration, the primary focus is on rural development and financial inclusion	Profitability is a core objective, and the bank aims to maximize returns for shareholders
Target Customer Base	Primarily rural and agricultural communities, with an emphasis on small and marginal farmers	Diverse customer base, including individuals, businesses, and corporations across various sectors
Deposit Insurance	Covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to a specified limit	Also covered by DICGC, providing deposit insurance up to a certain limit
Examples in India	Examples 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