The Government of India, the concerned State Government and the bank,
which had sponsored the RRB contributed to the share capital of RRBs in
the proportion of 50%, 15% and 35%, respectively. The area of operation of the RRBs is limited to notified few districts in a State. The RRBs
mobilise deposits primarily from rural/semi-urban areas and provide
loans and advances mostly to small and marginal farmers, agricultural
labourers , rural artisans and other segments of priority sector.
The RBI in 2001 constituted a Committee under the Chairmanship of Dr V S Vyas on “Flow of Credit to
Agriculture and Related Activities from the Banking System” which
examined relevance of RRBs in the rural credit system and the
alternatives for making it viable. The consolidation process thus was
initiated in the year 2005 as an off-shoot of Dr Vyas Committee
Recommendations. First phase of amalgamation was initiated Sponsor
Bank-wise within a State in 2005 and the second phase was across the
Sponsor banks within a State in 2012. The process was initiated with a
view to provide better customer service by having better infrastructure,
computerization, experienced work force, common publicity and marketing
efforts etc. The amalgamated RRBs also benefit from larger area of
operation, enhanced credit exposure limits for high value and diverse
banking activities. As a result of amalgamation, number of the RRBs has
been reduced from 196 to 64 as on 31 March 2013. The number of branches
of RRBs increased to 17856 as on 31 March 2013 covering 635 districts
throughout the country.
Sources of Funds
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.
Owned Funds
The owned funds of RRBs comprising of share capital, share capital
deposits received from the shareholders and the reserves stood at 19304
crore as on 31 March 2013 as against 16462 crore as on 31 March 2012;
registering a growth of 17.26%. The increase in owned funds to the tune
of 2842 crore was mainly on account of accretion to reserves by the
profit making RRBs. The share capital and share capital deposits
together amounted to 6174 crore of total owned fund while the balance
amount of 13130 crore represented reserves.
Recapitalisation of RRBs
(a) The Chakrabarty Committee reviewed the financial position of all
RRBs in 2010 and recommended for recapitalisation of 40 out of 82 RRBs
for strengthening their CRAR to the level of 9 per cent by 31 March
2012. According to the Committee, the remaining RRBs are in a position
to achieve the desired level of CRAR on their own. Accepting the
recommendations of the committee, the GOI along with other shareholders
decided to recapitalise the RRBs by infusing funds to the extent of
2200 Crore. The shareholder wise proportion (GOI/Sponsor Banks/State
Governments) is 50:35:15 respectively.
(b) As on 31 March 2013, an amount of 2015.86 crore has been released
to 37 RRBs in 20 States. The released amount includes GoI’s contribution
of 1003.92 crore, State Govt's contribution of 303.59 crore and
Sponsor bank's contribution of 708.35 crore. The recapitalisation is
complete in respect of 35 RRBs (5 in Odisha , 3 in MP, 2 in Uttarakhand,
2 in Jharkhand, 2 in Chhatisgarh, 2 in Bihar, 2 in Maharashtra, 3 in
West Bengal, 5 in Rajasthan and one each in Assam, Arunachal Pradesh,
Nagaland, Tripura, J&K, Karnataka, Tamil Nadu, Gujarat & UT of
Puducherry). GoI share 7.99 cr. is pending in respect of Manipur Rural
Bank. Mizoram State Government has partially released 0.50 crore in
respect of Mizoram Rural Bank and 2.80 crore is pending. Two State
Govts. viz. UP(2 RRBs), & J&K (1 RRB) have not released any
amount in respect of 3 RRBs operating in their states. Out of 35 fully
recapitalised RRBs, 3 RRBs viz. Central Madhya Pradesh GB, Manipur Rural
Bank and Mizoram GB have not achieved CRAR of 9 per cent as on
31.3.2013.
Deposits
Deposits of RRBs increased from 186336 crore to 211458 crore during
the year registering growth rate of 13.48 %. There are Thirty three (33)
RRBs having deposits of more than 3000 crore each.
The Regional Rural Banks (Amendment) Bill, 2014
The Regional Rural Banks (Amendment) Bill, 2014 was introduced by the
Minister of Finance, Mr. Arun Jaitley, in Lok Sabha on December 18,
2014. The Bill seeks to amend the Regional Rural Banks Act, 1976.
The Regional Rural Banks Act, 1976 mainly provides for the
incorporation, regulation and winding up of Regional Rural Banks
(RRBs).
Sponsor banks: The
Act provides for RRBs to be sponsored by banks. These sponsor banks
are required to (i) subscribe to the share capital of RRBs, (ii) train
their personnel, and (iii) provide managerial and financial assistance
for the first five years. The Bill removes the five year limit, thus
allowing such assistance to continue beyond this duration.
Authorised capital: The Act provides for the authorised capital of each
RRB to be Rs five crore. It does not permit the authorised capital to
be reduced below Rs 25 lakh. The Bill seeks to raise the amount of
authorised capital to Rs 2,000 crore and states that it cannot be
reduced below Rs one crore.
Issued capital: The
Act allows the central government to specify the capital issued by a
RRB, between Rs 25 lakh and Rs one crore. The Bill requires that the
capital issued should be at least Rs one crore.
Shareholding: The
Act mandates that of the capital issued by a RRB, 50% shall be held by
the central government, 15% by the concerned state government and 35% by
the sponsor bank. The Bill allows RRBs to raise their capital from
sources other than the central and state governments, and sponsor banks.
In such a case, the combined shareholding of the central government
and the sponsor bank cannot be less than 51%. Additionally, if the
shareholding of the state government in the RRB is reduced below 15%,
the central government would have to consult the concerned state
government.
The Bill states that the central government may by notification raise or
reduce the limit of shareholding of the central government, state
government or the sponsor bank in the RRB. In doing so, the central
government may consult the state government and the sponsor bank. The
central government is required to consult the concerned state government
when reducing the limit of shareholding of the state government in the
RRB.
Board of directors: The
Act specifies the composition of the Board of Directors of the RRB to
include a Chairman and directors to be appointed through the central
government, NABARD, sponsor bank, Reserve Bank of India, etc. The Bill
states that any person who is a director of an RRB is not eligible to be
on the Board of Directors of another RRB.
The Bill also adds a provision for directors to be elected by
shareholders based on the total amount of equity share capital issued to
such shareholders. If the equity share capital issued to shareholders
is 10% or less, one director shall be elected by such shareholders. Two
directors shall be elected by shareholders where the equity share
capital issued to them is from 10% to 25%. Three directors shall be
elected in case of equity share capital issued being 25% or above. If
required, the central government can also appoint an officer to the
board of directors to ensure effective functioning of the RRB.
The Act specifies the term of office of a director (excluding the
Chairman) to be not more than two years. The Bill raises this tenure to
three years. The Bill also states that no director can hold office for
a total period exceeding six years.
Closure and balancing of books:
As per the Act, the books of a RRB should be closed and balanced as on
December 31 every year. The Bill changes this date to March 31 to
bring the Act in uniformity with the financial year.
At present there are 56 RRBs in India (There is no RRBs working in Goa and Sikkim)
Name of the RRBs Present Head Office State / UT
1. Allahabad UP Gramin Bank Banda, Uttar Pradesh
2. Andhra Pradesh Grameena Vikas Bank Warangal, Telangana
3. Andhra Pragathi Grameena Bank Kadapa, Andhra Pradesh
4. Arunachal Pradesh Rural Bank Naharlagun (Papumpare), Arunachal Pradesh
5. Assam Gramin Vikash Bank Guwahati, Assam
6. Bangiya Gramin Vikash Bank Murshidabad, West Bengal
7. Baroda Gujarat Gramin Bank Bharuch, Gujarat
8. Baroda Rajasthan Kshetriya Gramin Bank Ajmer, Rajasthan
9. Baroda UP Gramin Bank Raibareilly, Uttar Pradesh
10. Bihar Gramin Bank Begusarai, Bihar
11. Central Madhya Pradesh Gramin Bank Chhindwara, Madhya Pradesh
12. Chaitanya Godavari Grameena Bank Guntur, Andhra Pradesh
13. Chhattisgarh Rajya Gramin Bank Raipur, Chhattisgarh
14. Dena Gujarat Gramin Bank Gandhinagar, Gujarat
15. Ellaquai Dehati Bank Srinagar, Jammu & Kashmir
16. Gramin Bank of Aryavart Lucknow, Uttar Pradesh
17. Himachal Pradesh Gramin Bank Mandi, Himachal Pradesh
18. J & K Grameen Bank Jammu, Jammu & Kashmir
19. Jharkhand Gramin Bank Ranchi, Jharkhand
20. Karnataka Vikas Grameen Bank Dharwad, Karnataka
21. KashiGomtiSamyut Gramin Bank Varanasi, Uttar Pradesh
22. Kaveri Grameena Bank Mysore, Karnataka
23. Kerala Gramin Bank Mallapuram, Kerala
24. Langpi Dehangi Rural Bank Diphu, Assam
25. Madhya Bihar Gramin Bank Patna, Bihar
26. Madhyanchal Gramin Bank Sagar, Madhya Pradesh
27. Maharashtra Gramin Bank Aurangabad, Maharashtra
28. Malwa Gramin Bank Sangrur, Punjab
29. Manipur Rural Bank Imphal, Manipur
30. Meghalaya Rural Bank Shillong, Meghalaya
31. Mizoram Rural Bank Aizawl, Mizoram
32. Nagaland Rural Bank Kohima, Nagaland
33. Narmada Jhabua Gramin Bank Indore, Madhya Pradesh
34. Odisha Gramya Bank Bhubaneshwar, Odisha
35. Pallavan Grama Bank Salem, Tamil Nadu
36. Pandyan Grama Bank Virudhunagar, Tamil Nadu
37. Paschim Banga Gramin Bank Howrah, West Bengal
38. Pragathi Krishna Gramin Bank Bellary, Karnataka
39. Prathama Bank Moradabad, Uttar Pradesh
40. Puduvai Bharthiar Grama Bank, Puducherry
41. Punjab Gramin Bank Kapurthala, Punjab
42. Purvanchal Bank Gorakhpur, Uttar Pradesh
43. Rajasthan Marudhara Gramin Bank Jodhpur, Rajasthan
44. Saptagiri Grameena Bank Chittor, Andhra Pradesh
45. Sarva Haryana Gramin Bank Rohtak, Haryana
46. Sarva UP Gramin Bank Meerut, Uttar Pradesh
47. Saurashtra Gramin Bank Rajkot, Gujarat
48. Sutlej Gramin Bank Bhatinda, Punjab
49. Telangana Grameena Bank Hyderabad, Telangana
50. Tripura Gramin Bank Agartala, Tripura
51. UtkalGrameen Bank Bolangir, Odisha
52. Uttarbanga Kshetriya Gramin Bank Coochbehar West Bengal
53. Uttar Bihar Gramin Bank Muzaffarpur Bihar,
54. Uttarakhand Gramin Bank Dehradun, Uttarakhand
55. Vananchal Gramin Bank Dumka, Jharkhand
56. Vidharbha Konkan Gramin Bank Nagpur, Maharashtra
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