Amalgamating rural banking

Establishment of Regional Rural Banks (RRBs) was based upon the report of the Working Group Committee headed by M Narsimha dated 30 July, 1975.

- Gopabandhu Mohapatra

The committee recommended the establishment of a new type of banking institution to supplement the efforts of commercial and cooperative banking institutions in the rural sector to develop the grassroots level economy. Later RRB Act of 1976 was passed on 9 February, 1976, expanding their network in mostly lead districts, maintaining a lean structure. Central government, state and sponsored banks held the stake in the proportion of 50:15:35. While the onus of management of RRBs rested on the sponsoring banks, the stake is well diversified.

The first RRB Prathama Grameen Bank was opened on 2 October, 1975, in Moradabad, which was sponsored by Syndicate Bank. RRBs since then were supervised by National Bank for Agriculture and Rural Development (NABARD). Initially, 6 RRBs started with 17 branches, and by 1991, the number grew to 196 RRBs with 14,000 branches.