Union Cabinet gives nod to amendments to Regional Rural Banks (RRBs) Act, 1976

February 6, 2013

The Union Cabinet approved the amendments proposed in the Regional Rural Banks (RRBs) Act, 1976

Objective:

To enhance authorized and issued capital to strengthen their capital base.
The term of the non official directors appointed by the Central Government is proposed to be fixed not exceeding 2 years.
How these amendments will it help RRBs?
These amendments are aimed at bringing financial stability in RRBs which will make then capable to play a larger role in financial inclusion and meet the credit requirements of rural areas and strengthen the Boards of RRBs.
A brief account of RRBs
Regional Rural Banks (RRBs) were set up under Regional Rural Banks Act, 1976 (the RRB Act) to build an alternative channel to the ‘cooperative credit structure and to ensure sufficient institutional credit for the rural and agriculture sector.
The ownership of RRBs is jointly with the Government of India, the concerned State government and sponsor banks, with the issued capital shared in the proportion of 50%, 15 % and 35%, respectively. As per provisions of the Regional Rural Banks Act, 1976 the authorized capital of each RRB is Rs. 5 crore and the issued capital is a maximum Rs. 1 crore.