Rural Banking : India And Its Expanding Scope Essay

1505 Words Aug 27th, 2016 7 Pages
Rural Banking Potential In India and its Expanding Scope
History –
Rural areas are endowed with not only the agriculture but also with the activities like fisheries, bee keeping, livestock etc. The question that arises here is, even with such potential of making profits who is there to fund their ideas. In 1975 the narshimhan committee recommended the formation of regional rural banks in India. On 2nd October 1976 five RRBs were setup with the capital of 100crores but later it was augmented to 500crores the five banks. The central government, the state government and the sponsor banks. Who held shares in the ratios as follows Central Government-50%, State Government- 15% and Sponsor Banks- 35 %. Earlier, Reserve Bank of India had laid down ceilings on the rate of interest to be charged by these RRBs.
Basically, the main idea behind the establishment of these banks was that during the Indira Gandhi regime the main stream of population that is 70% of the total population used to live in the village for the modernization of the farmer population. Current status-Currently the rural regional banks are going through amalgamation and consolidation.25 RRBs have been amalgamated in January 2013 into 10 RRBs. This counts to 67 RRBs till the first week of June 2013. This count reached to 56 as of March 2015. On 31 March 2006, there were 133 RRBs (post-merger) covering 525 districts with a network of 14,494 branches. All RRBs were originally conceived as low cost institutions…

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