when did regional rural banks start functioning in india
Regional Rural Bank Regional Rural Banks were established under the provisions of an Ordinance passed in September 1975 and the RRB Act 1976 to provide sufficient banking and credit facility for agriculture and other rural sectors. These were set up on the recommendations of The M. Narasimham Working Group[1] during the tenure of Indira Gandhi's government with a view to include rural areas into economic mainstream since that time about 70% of the Indian Population was of Rural Orientation. The development process of RRBs started on 2 October 1975 with the forming of the first RRB, the Prathama Bank with authorised capital of Rs. 5 crore at its starting. Also on 2 October 1976 five regional rural banks were set up with a total authorised capital Rs. 100 crore ($10 Million) which later augmented to 500 crore ($50 million). The Regional Rural Banks were owned by the Central Government, the State Government and the Sponsor Bank (there were five commercial banks, Punjab National Bank, State Bank of India, Syndicate Bank, United Bank of India and UCO Bank, which sponsored the regional rural banks) who held shares in the ratios as follows Central Government – 50%, State Government – 15% and Sponsor Banks – 35%.[2] Earlier, Reserve Bank of India had laid down ceilings on the rate of interest to be charged by these RRBs.