Financial performance of regional rural banks.latest banking awareness for upcoming exams 2016-17 Regional Rural Banks financial awareness.A lot of candidates have been preparing for the banking examination and they have to learn and understand the pattern of the examination. All those candidates should be well aware about the details of Regional rural banks which are very important. These banks were established to cater to the needs to farmers and small artisans and labor and candidates should know some of the details about these banks. RRBS, came into the existence in 1975 with the recommendation of Narsimha Committee which urged to have to regional rural banks in major states to cater to the needs t the farmers and to provide them loans on cheaper rates which may help them and to overcome the problems of villages/ farmers etc. Regional rural banks today play a very important role in the development of the country. These RRBs are owned jointly by the central government, state government and Sponsoring bank and their area of operation are specialized and located within the state only. They are working under the state and central government both but they are not nationalized banks and the branches of the banks are available in that particular state only.
Details about Regional Rural banks
The share of center, state and sponsoring bank in RRBs are in the ratio of 50%, 35% and 15% currently and this keep on changing from time to time as per the direction of the government. Almost all the RRBs are sponsored by only one of the 5 nationalized banks which are SBI, Punjab national bank, syndicate bank, Canara bank etc. Some of the imp details about the RRBs are as under:
- RRBs were set up on the recommendations of the Narasimham Working Group.
- The first RRB to be set up was the Prathama Bank, sponsored by Syndicate Bank on October 2, 1975 in Uttar Pradesh. The head office is at Moradabad, UP..
- The regulatory authority of these RRBs is NABARD.
- All the RRBs are on Core Banking platform like other commercial banks.
- The area of operation of the RRBs is limited to few districts in a State.
- Sponsor bank can be any Nationalized Commercial Bank.
- The sources of funds of RRBs comprise of owned fund, deposits, borrowings from NABARD, Sponsor Banks and other sources including SIDBI and National Housing Bank.
- RBI has allowed the RRBs to maintain a lower level of SLR than commercial banks.
- The Chakrabarty Committee reviewed the financial position of all RRBs in 2010 and recommended for recapitalization.