#27: Regional Rural Banks
One of the Fav topics of UPSC!
15,000 Regional Rural Banks branches will now extend credit in rural areas for education, housing, and small businesses.
Reason behind this move
- Slow lending pace of PSBs to education
- Poor state of MSMEs
- EASE reforms to be extended to RRBs
- Make RRBs competitive & business friendly
About RRBs
- Estd 1975 u/ Ordinance of 1975 & RRB Act 1976
- Total 43 RRBs operational
- Equity distribution
a) 50% GoI
b) 15% state govt
c) 35% PSB (Sponsor bank)
Functions
- Rural credit for agri
- Mobilize rural savings
- Financial inclusion in far off areas
- Social equity features
- Enhance public confidence in financial system
Issues
- Limited scope of work (reforms to correct this)
- High operational cost against limited revenue
- Low innovation scope
Way Forward
- Investments in outreach, profitability, and digitization
- Internet banking products
- Use of RRB network for DBTs and extension of KCC like schemes
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