Regional rural banks incur net loss of Rs 2,206 crore in FY20

• Data was recently published by National Bank for Agriculture and Rural Development (NABARD). As on March 31, 2020, there were 45 RRBs functioning in 685 districts of 26 states and 3 UTs.

• RRBs were set up as state-sponsored, regionally based and rural oriented institutions under the Regional Rural Banks Act, 1976. RRBs are regulated by Reserve Bank of India and are supervised by NABARD.

• RRBs are jointly owned by the Centre, the state government concerned and sponsor banks with the issued capital shared in the proportion of 50%, 15% and 35%, respectively.

The mandate of RRBs is to:

• Serve the credit needs of the small and marginal farmers, agricultural labourers, socio-economically weaker section of population for development of agriculture, trade, commerce, industry and other productive activities.

• Reduce regional imbalances and increase rural employment generation activities.

• Develop such measures which could restrict the outflow of rural deposits to urban areas.

Issues faced by RRBs:

• To inadequate finance,

• High overdues and poor loan recovery,

• To lack of technology, procedural rigidities etc.


Mains Paper 3: Economy

Prelims level: Regional rural banks

Mains level: Mandate and issues faced by RRBs

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