DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH

Name : G.Rajeswari
Designation : Senior Lecturer
Branch : Commercial and Computer Practice
Institute : Government Polytechnic, Srikakulam
Year/Semester : V semester
Subject : Banking
Subject code : CCP 504(B)
Topic : Banking, types of banks
Duration : 50mts
Sub topic : Regional Rural Banks
Teaching Aids : PPT, Animation

CCP-504 (B). 8 1
Objectives:-
Objectives

On completion of this period, you would

be able to Understand :
 the meaning of Regional Rural Banks
(RRB) and need for RRBs.
 the features of RRBs.
 the functions of RRBs.

CCP-504 (B). 8 2
Recap

In the Last class ,we learnt

 The meaning of Agricultural Bank

 The Features of Agricultural Bank
 The Functions of Agricultural Bank

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(REGIONAL RURAL BANKS) R.R.B

Meaning
 The Banks started in Rural Areas.
 To fill the gap in the Rural credit.
 Sponsored by Commercial Banks.
 Restricted to one or two Districts.

CCP-504 (B). 8 4
Regional Rural Banks

Need for setting up of RRBs:

 In the previous classes, you have learnt about the

functions of commercial banks and agricultural
banks.
 Agricultural Banks mainly concentrate on rural
credit.

CCP-504 (B). 8 5
Regional Rural Banks

 Commercial banks also issue loans for

priority sectors.
 So, is there any need to set up special
type of banks to develop rural areas?
 The answer is ‘Yes’

CCP-504 (B). 8 6
 Regional Rural Banks
 The establishment of RRB became necessary
because the existing institutions would not be able to
fill the gaps in the rural credit institutional system.

 The Regional Rural Banks were set up in 1975 to

fulfill one of the objectives of 20 point Economic
Program.

CCP-504 (B). 8 7
 Regional Rural Banks
 Objectives of setting up of RRB are :

1.Liquidation of rural indebtedness.

2.Provision of institutional credit to farmers, rural

credit, rural artisans and weaker sections.

 With the setting up of RRB, multi-agency approach

was adopted towards rural credit.

CCP-504 (B). 8 8
Features of Regional Rural Banks

 These banks were set up on the recommendations

of Narasimham committee.
 Regional Rural Banks are the subsidiaries of public
sector banks.
 These banks are scheduled commercial banks
supported by government but sponsored by
commercial banks.

CCP-504 (B). 8 9
Features of Regional Rural
Banks
 Share capital was subscribed by Central
Government, State Government and sponsoring
bank.
 Share capital subscribed by Central Government-
50%, State Government-35% and sponsoring
bank-15%.
 All types of assistance is given by sponsoring bank
during first 5 years.

CCP-504 (B). 8 10
Features of Regional Rural
Banks
 The area of operation of a rural bank is limited to one
or two districts.
 The rate of interest charged by them shall not be
higher than the prevailing rates of co-operative
societies.
 These banks get refinance facilities from NABARD
 These banks also maintain cash reserves of 3% of
the total liabilities.

CCP-504 (B). 8 11
Features of Regional Rural
Banks
 Visakha Grameena Bank, Godavari Grameena
Bank are examples for RRB.

 These interests of the depositors are protected by

the deposit insurance and credit guarantee
corporation.

CCP-504 (B). 8 12
Functions of Regional Rural Banks.

RRB perform the following functions.

 They provide credit facilities to agricultural sector.
 These bank also collect deposits from the public.
 Emphasis is given to small and marginal farmers
and agricultural labourers.

CCP-504 (B). 8 13
Functions of Regional Rural
Banks.
 They provide subsidiary services like Commercial
Banks.
 They promote all round development of the villages.
 They also help small business units and self-
employment schemes.

CCP-504 (B). 8 14
Summary
 There is need for setting up of RRB to fill the credit
gap rural areas.
 With the starting of RRB, multi-agency approach was
adopted to develop the rural areas.
 RRB are subsidiaries to public sector Banks.
 Share capital is contributed by Central Government,
State Government and Sponsoring Bank.

CCP-504 (B). 8 15
Summary
 They provide rural credit.

 Emphasis is given to small and marginal farmers

and agricultural labourers.

 These banks perform all the functions of

Commercial Banks.

CCP-504 (B). 8 16
Quiz

1. Regional Rural Banks were set up on the

recommendations of which committee?

A. Narasimham
B. Rangarajan
C. Raman
D. None

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Quiz
1. The RRB get refinance facilities from

A. RBI
B. NABARD
C. Central Government
D. State Government

CCP-504 (B). 8 18
Quiz
3. RRBs concentrate on

A. Rural Credit
B. Urban Credit
C. Housing Loans
D. None

CCP-504 (B). 8 19
Frequently Asked Questions

 What are the features of Regional Rural Banks?

 What are the functions of Regional Rural Banks?
 Explain the need for Regional Rural Banks and
their functions?

CCP-504 (B). 8 20
Assignment:

1. Visit a Grameena Bank of your area and know

which bank has sponsored that bank?
2. Know the activities of that bank.
3. Know the various types of deposits and loans
offered by that bank.

CCP-504 (B). 8 21