Structure as well as Capital of Regional Rural Banks
RRBs are basically sponsored banks. They are sponsored past times scheduled commercial banks. At present, the authorized working capital missive of the alphabet of an RRB is Rs. 500 Crores (initially it was Rs. five Crores but on 23rd Apr 2013, the Indian Government has introduced a nib raising it past times 100 times to Rs. 500 Crores). The Centre holds l per cent stake inwards RRBs, piece 35 per cent as well as fifteen per cent are alongside the sponsor banks as well as province governments, respectively. RRBs are managed past times a Board of Directors consisting of a Chairman, Three Directors to hold out nominated past times the Central Government, non to a greater extent than than 2 directors to hold out nominated past times the State Government, as well as non to a greater extent than than iii directors to hold out nominated past times the Sponsoring bank.
Functions of RRBs
Every RRB shall deport on the transact work concern of banking equally defined inwards clause (b0 of department five of the Banking Regulation Act, 1949. They undertake specific functions, which are equally follows :
- Granting loans as well as advances to small-scale as well as marginal farmers as well as agricultural laborers, whether individually or inwards groups, to cooperative societies, agricultural processing societies, co-operative farming societies, primarily for agricultural purposes.
- Granting of loans as well as advances to artisans, small-scale entrepreneurs as well as persons of small-scale agency engaged inwards trade, commerce as well as manufacture or other productive activities inside its expanse of operations.
- Accepting Deposits
- Other Functions such equally issuing fit books, need drafts etc.
Difference Between RRBs as well as Commercial Banks
Regional Rural Banks are likewise scheduled banks. However they differ from commercial banks inwards the next aspects.
- RRB is bargain to hold out a cooperative gild for the purpose of Income-Tax Act 1961.
- The expanse of operations of RRB is express to specific portion relating to 1 or to a greater extent than districts inwards the concerned state. Commercial banks, equally nosotros know lead hold no such restrictions they may opened upward branches anywhere inwards the province as well as exterior the province also.
- RRBs grant loans as well as advances solely to small-scale as well as marginal farmers, agricultural laborers, rural artisans, small-scale entrepreneurs as well as small-scale traders. Commercial banks grant loans to all types of borrowers mostly but likewise to the inwards a higher house category borrowers equally component of priority sector lending.
- Interest paid past times RRBs on its term deposits may hold out one-half per centum to a greater extent than than i.e., paid past times commercial banks.
- Interest charges past times RRBs on loans as well as advances cannot hold out to a greater extent than than what is charged past times cooperative banks inwards the state. This restriction does non apply to commercial banks.