They have been created with a read to serve primarily the agricultural areas of India with basic banking and monetary services

To determine the minimum capital requirements of the RRBs; 6. To suggest methods for better governance of RRBs; and 7. To suggest suitable regulation and supervision of the RRBs. Recommendations of Sardesai Committee The important Recommendation was with regard to restructuring options 4.6.6.1
Merger Amalgamation There is a large variation in the number of districts covered and the branch network of the RRBs. While 47 RRBs cover only one district each, l11 RRBs cover 2-3 districts, 29 RRBs 4-5 districts and Q are operating in 6-9 districts. Similarly, 72 RRBs have up to 50 branches, 87 RRBs have 51-100 branches, 21 RRBs have 101-150 branches and 16 have more than 150 branches.
As many as 8 sponsor banks have only one RRB sponsored by them.While 11 sponsor banks have 2-4 sponsored RRBs, 3 sponsor banks have up to 10 RRBs and 8 sponsor banks have more than 10 RRBs sponsored by them in various states. Of these, only 2 sponsor banks have more than 20 RRBs.
to enhance the operational viability of rrbs and take gain of the economies of scale (with the aid of using lowering transaction price, and many others.), the direction of merger/amalgamation of RRBs may be considered contemplating the perspectives of the various stakeholders. The merged entities can have a bigger region of operation and the merger technique will assist in strengthening some of the susceptible RRBs. the following alternatives are available.

Ø Merger between RRBs of the same sponsor bank in the identical kingdom. Ø Merger of RRBs sponsored by using special banks in the same kingdom. The system will bring down the number of RRBs and make it greater handy for the sponsor banks to manage the affairs of the RRB. Merger of RRBs with the sponsor bank is not furnished for in the RRBs Act 1976 and further, such merger8 might cross in opposition to the spirit of putting in of RRBa as neighborhood entities and for offering credit normally to weaker sections. 4.6.6.2

trade of sponsor banks a trade in sponsorship may additionally inter alia enhance the competitiveness, work tradition, management and performance of the worried RRBs. For this,new banks-both public and private sector banks-cauld be considered. The RRBs Ad, 1976 does nA specific~lly provide for the transfer of sponsorship from one sponsor bank to another.
However, provisions have been made under section 23 A of the act for the principal government to effect amalgamation of rural regional banks. 4.7 STATE-WISE SPREAD OF RURAL REGIONAL BANKS AND THEIR NETWORK AND COVERAGE AT THE END OF MARCH- 2014 Table reveals that the state of Uttar Pradesh is having highest number of RRBs (9) andnumber of branches 3518 covering highest district (81), followed by Andra Pradesh number of RRBs (5) number of branches (1630) and number of district covered (23), Karnataka number of RRBs (4), Number of branches (1460) and number of district covered (30), Bihar number of RRBs (3) number of branches 1718 and number of district covered 38), Madhya Pradesh (number of RRBs 3, number of branches (1132) and number of district covered (50) Rajstan number of RRBs (3) number of branches (1157) and number of district covered (36).
From the above, it is evident that six states (Uttar Pradesh, Andra Pradesh, Karnataka Bihar, Madhya Pradesh, Rajasthan) are enjoying the lions share with highest number of RRBs (more than 50%) covering more number of district with their widen branch network. It is interesting to observe that the share of North Eastern states Manipur, Meghalaya, Mizoram Nagaland, Tripura, Arunachal Pradesh, is insignificant in terms of number of RRBs, number of branches covered, and district covered.
The striking observation is that such states are having only one RRB with least number of branches, where as the state of Nagaland has only 10 branches. It is the clear indication of the imbalance growth of RRBs where the prominent backward areas have been given least priority in providing banking facilities. It reveals the failure of RRBs to cater the credit needs of the backward areas. Table: 4.2 STATE WISE SPREAD OF RURAL REGIONAL BANKS Sl.No. Name of the State No.
of RRBs No. of Branches No. of Districts covered 1 Andhra Pradesh 5 1630 23 2 Arunachal Pradesh 1 27 8 3 Assam 2 427 27 4 Bihar 3 1718 38 5 Chattisgarh 3 555 28 6 Gujarat 3 529 26 7 Haryana 2 507 23 8 Himachal Pradesh 1 188 12 9 Jammu and Kashmir 2 323 26 10 Jarkhand 2 442 24 11 Karnataka 4 1460 30 12 Kerala 2 506 15 13 Madhya Pradesh 3 1132 50 14 Maharastra 2 645 33 15 Manipur 1 28 9 16 Meghalaya 1 76 7 17 Mizoram 1 71 8 18 Nagaland 1 10 5 19 Orissa 2 901 30 20 Pondicherry 1 30 2 21 Punjab 3 311 24 22 Rajasthan 3 1157 36 23 Tamilnadu 2 374 31 24 Tripura 1 133 8 25 Uttar Pradesh 9 3518 81 26 Uttaranchal 1 237 13 27 West Bengal 3 921 18 Total 64 17856 635 Table: 4.3
LIST OF RRBS FUNCTIONING IN THE COUNTRY AS ON 31.03.2015 S. No. Name of Regional Rural Bank Sponsor Bank State 1 Allahabad UP Gramin Bank Allahabad Bank Uttar Pradesh 2 Andhra Pradesh Grameena Vikas Bank State Bank of India Andhra Pradesh 3 Andhra Pragathi Grameena Bank Syndicate Bank Andhra Pradesh 4 Arunachal Pradesh Rural Bank State Bank of India Arunachal Pradesh 5 Assam Gramin Vikash Bank United Bank of India Assam 6 Bangiya Gramin Vikash Bank United Bank of India West Bengal 7 Baroda Gujarat Gramin Bank Bank of Baroda Gujarat 8 Baroda Rajasthan Kshetriya Gramin Bank Bank of Baroda Rajasthan 9 Baroda UP Gramin Bank Bank of Baroda Uttar Pradesh 10 Bihar Gramin Bank UCO Bank Bihar 11 Central Madhya Pradesh Gramin Bank Central Bank of India Madhya Pradesh 12 Chaitanya Godavari Grameena Bank Andhra Bank Andhra Pradesh 13 Chhattisgarh Rajya Gramin Bank State Bank of India Chhattisgarh 14 Dena Gujarat Gramin Bank Dena Bank Gujarat 15 Ellaquai Dehati Bank State Bank of India Jammu & Kashmir 16 Gramin Bank of Aryavart Bank of India Uttar Pradesh 17 Himachal Pradesh Gramin Bank Punjab National Bank Himachal Pradesh 18 J&K Grameen Bank J&K Bank Ltd.
Jammu & Kashmir 19 Jharkhand Gramin Bank Bank of India Jharkhand 20 Karnataka Vikas Grameena Bank Syndicate Bank Karnataka 21 Kashi Gomti Samyut Gramin Bank Union Bank of India Uttar Pradesh 22 Kaveri Grameena Bank State Bank of Mysore Karnataka 23 Kerala Gramin Bank Canara Bank Kerala 24 Langpi Dehangi Rural Bank State Bank of India Assam 25 Madhyanchal Gramin Bank State Bank of India Madhya Pradesh 26 Madhya Bihar Gramin Bank Punjab National Bank Bihar 27 Maharashtra Gramin Bank Bank of Maharashtra Maharashtra 28 Malwa Gramin Bank State Bank of Patiala Punjab 29 Manipur Rural Bank United Bank of India Manipur 30 Meghalaya Rural Bank State Bank of India Meghalaya 31 Mizoram Rural Bank State Bank of India Mizoram 32 Nagaland Rural Bank State Bank of India Nagaland 4.8
ORGANISATIONAL STRUCTURE OF RRBS The Organizational shape for RRB's varies from branch to branch and depends upon the nature and length of commercial enterprise performed by means of the department. the top office of a RRB typically had three to seven departments. the following is the selection making hierarchy of officials in a local Rural bank. · Board of Directors · Chairman & Managing Director · General Manager · Chief Manager/Regional Managers · Senior Manager · Manager · Officer / Assistant Manager · Office Assistant (Multipurpose 4.9
PERFORMANCE AND PROGRESS OF THE RURAL REGIONAL BANKS IN INDIA Rural Regional Banks appeared on the Indian banking scene for the first time in October 1975 as a strong third plank in the Indian multi-agency system of rural credit as one of the major components of the 'Twenty Points Economic Programme". The need for having a separate institution in the field of rural credit was felt in the face of 'disabilities' of the more or less monopolistic co-operatives.
Also, the commercial banks with their high cost of operations, urban bias and attitudinal problems seemed to have serious limitations in making headway in the field of rural financing. It was therefore, considered expedient to have a special type financial institution which could be more responsive to the overall requirements of rural credit demand.
Rural Regional Banks thus created, occupy a unique position in the Indian Banking system. They are the State sponsored, regionally based and rural oriented commercial banking institutions vested primarily with the responsibility of deposit mobilization from and catering to the credit needs of a target group (viz., small and marginal farmers, agricultural labourers, rural artisans and entrepreneurs).
The important objectives in the back of the established order of Rural Regional Banks are • for taking the banking offerings to the doorsteps of rural masses, especially in hitherto unbanked rural regions; • to make available institutional credit to the weaker sections of the society who had by means of a ways.very little get entry to to less expensive loans and had perforce been depending on the non-public cash lenders; • to mobilise rural financial savings and channelise them for assisting effective activities within the rural areas; • to create a supplementary channel for waft of credit score from the central cash market to the rural regions via refinance • to generate employment possibilities in rural areas; and • to carry down the price of purveying credit score in rural, areas.
The Government of India set up five Rural Regional Banks to start with, within a week of the promulgation of the Rural Regional Banks Ordinance on 2nd October 1975. Since 1975, there has been a rapid expansion in the number of Rural Regional Banks and their branches. As on June .10, 1988, the number of Rural Regional Banks stood at 196 which covered 365 districts, with a net work of branches numbering 13,586 and they made advances to the tune of Rs.2,428.63 Crores and collected deposits of Rs. 2,455. 9.1 Crores.
They witnessed a tremendous expansion in terms of geographical coverage, deposit mobilisation and deployment of. Credit to target groups in the rural areas. In the context of the above objectives and overview of growth it would be appropriate to review the performance of Rural Regional Banks in the light of the experience of their working in the past one and half decades or so and also to determine the extent to which they have met the original objectives for which they were set up.
It follows that the assessment: of overall performance of Rural Regional Banks should be based on the extent and range of achievement of the social objectives already set as also control of costs and earning of: adequate profit for viability, on the basis of the data generated. This section seeks to analyse the performance of the Rural Regional Banks with four chosen criteria (I;!PDP) for judging the direction and growth path of Rural Regional Banks in India.
(i) Expansion - The coverage of different geographical areas by Rural Regional Banks; (ii) Performance in terms of deposit mobilization; (iii) Disbursement of loans, creel i t-deposit ratio achieved and clients served; and (iv) Their financial performance in terms of profits realized and attainment of viability. 4.10 RURAL BANKING: THE INDIAN LANDSCAPE “Financial Inclusion” and “Rural Banking” are often used interchangeably to denote the mandate of reaching financial services to the huge unbanked masses of rural India.
In impact, the previous is a strategy or, as NABARD defines it, a manner, while the latter denotes a paradigm and style of banking. A rural bank, whilst basically a car of monetary inclusion, exists solely to carrier the specific economic needs of a humans that survive on farming and animal husbandry in Indian villages. In a social experience, a rural bank enters the daily lives of its customers and will become a companion of their properly-being and distress.
it is able to upload on services in response to shifts in demographic patterns - as an instance, facilitating payments to and from farmers' circle of relatives members analyzing and working in cities. it can take widespread recourse to technology to cut costs, to increase outreach and to enhance approaches - mobile banking, bank-ina-kiosk, biometric ATMs and smartcards all being properly examples.
but, its targets, commercial enterprise traces and style are continually defined by means of the extraordinary financing necessities of farmers, by crop cycles, with the aid of the vagaries of weather and by way of seasonal occasions like festivals. The traditional banking machine, the structures and strategies of which might be virtually designed for the urban business and enterprise financing, has boundaries in reaching out to the final mile. this is the distance that the rural banking device addresses.

The essential stated objective of rural banks in India is to reach well timed credit score, at phrases dictated with the aid of social concerns in preference to monetary ones, to needy farmers, so they do not fall victim to the schemes of unscrupulous moneylenders. as the chart underneath shows, this purpose continues to be a long way from being finished. Shockingly, extra than half of Indian farmer households, basically share-croppers and marginal farmers, are outside the ambit of any kind of financial offerings - formal or casual! Fig:four.1 determine-1: Farmer families having credit get admission to 4.10.1

Reaching out to the target market In a multi-agency approach to address the need for providing rural credit, various institutions and conduits have been set up by way of the authorities of india, largely thru regulation. the subsequent is a schematic view of the drift of funds through those conduits. The view is more indicative than comprehensive and other players and channels do exist.
For example, a sufficiently large self-help group (SHG) may be funded directly by the state-level NABARD. Also, Nonbanking Finance Companies (NBFCs) and other organizations engaged in micro-finance have not been shown in the view. other than gaining access to price range via the channels proven below, the players finance their lending's via taking deposits and/or resorting to industrial borrowings and bond issuances.Fig: 4.2
Figure- The direction the funds take RBI sets precedence sector lending recommendations to business banks as a percent in their net financial institution credit (ANBC) or credit score equivalent in their off-stability sheet publicity (whichever is higher). precedence sector lending for a industrial bank consists of mandates for rural credit, which it can meet in a single or extra of three ways: • via constructing up a rural credit portfolio through its very own rural branches. usually, the scale of this portfolio, by way of itself, falls brief of the lending norms. • by placing low-hobby deposits with NABARD.
• by means of sponsoring a local Rural bank (RRB). An RRB is owned and backed by way of the Union government, the kingdom government and a commercial financial institution in a 50:15:35 ratio of paid-up capital. As of give up-2007, RRB places of work accounted for 37% of the entire rural offices of all scheduled commercial banks, and held 31% of the deposit accounts and 37% of the mortgage money owed in rural areas. put together, business banks and RRBs have almost 50,000 rural and semi-urban branches in India.

planning plays a critical position in the development system and over time this exercise has been decentralized. through getting ready ability connected credit Plans (PLPs) for every district of the united states, at some point of 1988-89 NABARD took the initiative of forging a link among the credit score planning mechanism of banks and the development making plans system of the government.

capability related credit Plans (PLPs) have on account that then evolved as the reference record for decentralized credit score planning that tries to map the prevailing capability for improvement and evolve the suitable mechanism thru which such potentials could be exploited over a specific time body. the annual credit score making plans exercise that NABARD undertakes in preparing the capacity linked credit score Plans (PLPs) .

thinking of the resources endowed with the country, infrastructure and extension aid to be had, market fashion, ability profile of the human beings and capacity of the credit score shipping device, NABARD has projected a credit capacity of ` 12726.83 crore for the state throughout 2014-15. This envisages an boom of 17.35% over the modern-day yr

projection.
It is noteworthy that while making assessment of credit potential in each district for the year 2014-15, necessary adjustments have been made within the sectoral estimates retaining in view the additional assets required to rebuild the lost agricultural-infrastructure due to floods that struck the kingdom in june 2013. The SFP seeks to present a comprehensive picture of the potential available for various sectors, the critical gaps that impede the realization of the potential and flow of optimal credit and suggests action plans for all stakeholders.
The State Focus Paper (SFP) prepared for 2014-15 is based at the plps which offers an illustration to the authorities and other stakeholders, to the numerous policy and operational measures necessary for creating conducive climate for sustainable development of the rural sector as well as the exploitable opportunities for development through credit.
The State Focus Paper is discussed with the bankers and State Government officials in the State Credit Seminar to facilitate dovetailing of the sectoral potentials in credit planning and budgetary exercise of the State Government respectively. In keeping with its Corporate Mission, NABARD continues to strive towards making rural economy of the state vibrant and responsive.
because the apex group for agriculture and rural improvement, nabard works in close association with the kingdom government, banks, promotional businesses, technical and Research institutions identified in this document. 4.10.2 Economic Indicators of the State: The work force engaged in agricultural activities is 58.39 % of total work force. the proportion of girl work pressure in general work pressure is 36.31 %.
The occupational distribution (2001 census) indicates that the share of cultivators is predominant in occupational structure. The major crops of the State are Paddy, Wheat, Barley, Sugarcane, Maize, Potato and Pulses. The share of food grains in total GCA was 86.56% and non food grains crops was 13.44 % in 2006-07 (provisional). In cereals, the maximum area was under wheat (42.36 %) followed by paddy (29.58 %) 4.10.3
Sunrise areas in Agriculture The sunrise areas in agriculture viz., horticulture, floriculture, organic farming, food processing, agricultural marketing infrastructure, micro irrigation, etc., have huge potential for growth. Knowledge interventions in the field of agriculture will help in improving productivity, nutrition management, soil health, water management, better input and output distribution. NABARD's endeavor has been in figuring out this capability via credit delivery and other related services. improvement of rural infrastructure, plugging the gaps which are crucial to agriculture improvement, rural extension offerings, agro processing, etc., are considered absolutely essential in achieving this objective. Provides for setting up private mandis, enabling contract farming and constitution of regulatory authority.
The Act seeks to regulate the sale and purchase of agriculture produces and envisages establishment of marketing development fund in the state. 4.10.4 Banking Business As on 31 March 2013, the outstanding advances was ` 36237 crore as against ` 27054 crore in the previous financial year thereby recording a growth of 33.94%. Since the formation of State, deposits in banks have increased tremendously - ` 53798 crore in 2011-12 to ` 62714 crore in 2012-13.
As on 31 March 2013, the overall CD ratio was 58 % in the state. 4.10.5 Credit Projections - SFP 2014-15 A credit potential of ` 12726.83 crore has been estimated in SFP for the year 2014-15 in agriculture and other priority sectors. This includes potential of ` 4295.55 crore for Crop Loan (short term loans for agriculture), 1739.23 crore for Long Term investments in agriculture sector including investment for Agriculture, 2570.10 crore for Non-farm sector including MSME and Food Processing and 4121.95 crore for Other Priority sector. 4.10.6
Core Banking Solutions (CBS) in Cooperative Banks As per the Reserve Bank of India (RBI) guidelines all the Cooperatives Banks have to be on the CBS platform by 31st March 2013. One of the major banking institutional initiatives in the State during the last year has been the CBS of all Cooperative Banks. All the Cooperative Banks signed the Service Level Agreement (SLA) with WIPRO on 5th September 2013 for implementing the CBS in 246 units of all Cooperative Banks under the guidance of NABARD.
NABARD then initiated the establishment of Computer Lab in Head Office of all 10 DCCBs and State Cooperative which was set up by Grant support from NABARD out of the Cooperative Development Fund (CDF). The Project Monitoring Unit (PMU) for the whole project was set up in the state. The roll out of all the 246 branches in CBS was completed by July 2013 including Head Office of all units.
After this 6 new branches have been opened by DCCBs directly in CBS. As on date total of 251 units of all Cooperatives which includes their Head Offices are on CBS. Now the road ahead for the Cooperatives is the issuance of Debit Cards to all its clients as well as RuPay KCC to all KCC holders. 4.10.7 Strengthening of PACS: PACS have now started turning themselves into Multi Service Centre in which they are provided financial assistance in form of loan and grant from NABARD for venturing into diversified activities to make themselves more viable and beneficial to the farmers.
Till now 100 PACS have been provided assistance for different activities like Rural Godowns, Solar Retail Shops, Power tiller etc. 4.10.8 Kisan Credit Card As on 31st March 2013, banks as against a target of 200000 cards had issued 135019 Kisan credit cards amounting to credit limit of ` 1260.82 crore. The cumulative number of cards issued till March 2013 stands at 811407 as against approx. nine lakh cultivators in the State.
GOI has desired that all eligible and willing farmers be covered under KCC. Banks may draw a time bound action plan for covering the remaining eligible farmers. Banks are also extending the benefit of interest subvention scheme, National Agriculture Insurance Scheme (NAIS) and Personal Accident Insurance Scheme (PAIS) to farmers covered by KCCs. However the response of cooperative banks for extending insurance coverage to all its eligible borrowers has not been comprehensive. 4.10.9
Investment credit in agriculture Increased investments under allied sector have a direct bearing on increased crop loan disbursements. Under investment credit, term loans are covered for minor irrigation, land development, farm mechanization, plantation and horticulture, forestry, dairy development, poultry/sheep/goat development, fishery, storage and market yards etc.
In majority of these sectors there are government sponsored schemes that are subsidized either by Government of India or by State Government. The popular schemes are credit linked subsidy scheme (CLSS) for rural godowns, Dairy Entrepreneurial Development, Construction/renovation/ expansion of rural godowns, primary region scheme for status quo of agri. clinics and agri. business facilities [ACABCs] by way of agriculture graduates, capital investment subsidy scheme for industrial manufacturing gadgets of organic inputs underneath national challenge on Organic Farming. Area specific schemes would go a long way to augment Bank finances. 4.10.10 Umbrella Programme on Natural Resources Management (UPNRM) - A New Funding Facility for Sustainable Natural Resources Management (NRM) National Bank for Agriculture and Rural Development (NABARD) has been enforcing natural aid management initiatives (watershed improvement and wadi improvement programmes) for the past many years.

which will in addition upscale and integrate NABARD's current NRM efforts into one streamlined approach of participatory NRM associated interventions, NABARD is implementing the Umbrella Programme on herbal assets management (UPNRM).