Nirmala Sitharaman ask Southern region RRB to focus on digitalisation
Economy
5 min read
Union Finance Minister Nirmala Sithraman asked the South region Regional Rural Banks (RRBs) to focus on increasing digitally active customers in line with the government's effort to move towards greater digitalisation.
Nirmala Sitharaman was speaking at a meeting with Chairpersons and senior officials of Regional Rural Banks from Southern Region, in Chennai on 4 August 2023. The meeting was attended by senior officers of Reserve Bank of India , Banks and of Andhra Pradesh, Telangana, Kerala, Puducherry and Karnataka and Tamil Nadu.
Nirmala Sithraman said that adoption of technology, Loan Management System and Core Banking System should be done in a time-bound manner in the RRBs of the Southern region.
Regional Rural Banks
Regional Rural Banks (RRB) were set up on the recommendation of Narasimham committee on Rural Credit 1975 .The government of India promulgated the Regional Rural Bank Ordinance in 1975 which was replaced by the Regional Rural Bank Act 1976.
Five RRBs were set up in India on 2 October 1975 . The first, Prathama Bank, was set up in Moradabad (U.P.) sponsored by Syndicate Bank.
At present there are 43 RRBs in India.
Who can set up RRB?
The power to set up RRB is vested with the government of India . The government of India can set up one or more RRBs in a State or Union Territories on the request of the sponsoring bank.
Who regulates the RRBs in India ?
RRBs are regulated by the Reserve Bank of India while the National Bank for Agriculture and Rural Development (NABARD) supervises the RRBs.
Ownership structure and capital requirement
Under the RRB act 1976 the authorized capital of the RRB was Rs 5 crores . The RRBs are owned by Central government, concerned state government and a sponsoring commercial banks in the following ratios ;
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Central government 50%,
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State government 15% and the
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Sponsoring Commercial banks being 35%.
Changes made by RRB amendment act 2015
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The authorised capital of the RRB has been raised from Rs 5 crore to Rs 2000 crores .
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The minimum issued capital of the RRB has been raised from Rs 25 lakhs to Rs 1 crore.
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It gives the central government the power to reduce the share holding of the central government , concerned state government and the sponsoring bank with prior consultation of the concerned state government and the sponsoring banks .
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It provides that the combined shareholding of the Central government and the sponsoring banks shall not be less than 51% in any case.
Objectives of the RRB
The RRB were established with the objectives of providing credit,saving and and other banking facilities to the small and marginal farmers, agricultural laboureres ,artisans and small entrepreneurs in the rural areas.
Current Status of RRBs in India
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As on 31 March 2021, there were 43 RRBs sponsored by 12 commercial banks operating in 26 States and 3 Union Territories (Jammu & Kashmir, Ladakh and Puducherry).
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There is no RRB in the state of Sikkim and Goa.
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11 Public sector banks and one private sector bank Jammu and Kashmir bank are the sponsors of the RRBs.
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Punjab and Sindh Bank is the only public sector bank which has not sponsored any RRB.
