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    You are at:Home » Objectives and Functions of Regional Rural Banks

    Objectives and Functions of Regional Rural Banks

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    By InfoDesk on February 5, 2021 Banking

    Objectives of Regional Rural Banks

    The main objective of RRBs is to provide credit facility and services to the rural- areas so that the economy can be accelerated on the path of development. “Its object is to provide at one place the special type of credit and banking facilities and other related services needed by agriculturists and other rural purposes”1. The regional rural banks strive to develop the rural economy with special emphasis on small and marginal farmers, farm labourers, rural artisans, and small entrepreneurs, etc.Objectives and Functions of Regional Rural Banks

    The following are the main objectives of RRBs in India:2

    1. Integrated Rural Development: An RRB endeavors :

    • (i) To integrate inputs, viz. infrastructure, extension services, and credit, which constitute a scheme.
    • (ii) Integrated rural development programmes.

    2. To cover fully the potential target population.

    3. To obtain break-even in four years.

    4. To inculcate banking habits in the rural masses and to tap idle money by way of deposits, and to buy land for productive purposes.

    5. To adopt the internal controls and reporting system and healthy growth of the corporate entity.

    Other objectives of RRBs are: (i) to provide banking facilities in remote and unbanked areas and (ii) to provide credit facilities to the weaker and neglected sections of the society with special reference to the 20-point economic programme.

    According to the Narasimham Committee, one of the important objectives of the RRBs is to attempt effective coverage of small and marginal farmers, landless labourers, rural artisans, etc. This objective is vital as the past experiences have shown that credit flow to rural areas, even if especially meant for the rural poor, was appropriated by well-to-do and influential sections of the society up to the 1970s.

    Functions of Regional Rural Banks

    The main function of the RRBs is to provide banking facilities to rural people. It also provides some non-banking facilities to the rural population, such as constructing and maintaining go-downs on their own, supplying agricultural inputs and, acquiring agricultural and other equipment for leasing it out, providing assistance in the marketing of agricultural and other products. More specifically, the functions of the RRBs are listed as follows:3

    • (i) To mobilize local savings by means of various types of deposits,
    • (ii) To provide short-term and medium-term credit for agriculture and other purpose to rural producers and long-term loans to agriculturists as an agent of the Land Mortgage Bank,
    • (iii) To implement programmes of the supervised credit tailored to the needs of individual farms,
    • (iv) To provide various ancillary banking services to local people such as remittance of funds, acceptance of insurance premium, safe deposit, ATMs and lockers, etc,
    • (v) To set up and maintain go-downs for storage of agricultural products,
    • (vi) To undertake supply of inputs and agricultural and retail equipment to farmers as an agent and in deserving cases leasing of equipment,
    • (vii) To improve assistance in the marketing of agricultural and other products through marketing organizations,
    • (viii) To help for the overall development of the villages in its jurisdiction.

    For citing this article, use:

    • Mohan, A. R. (2012). Role of regional rural banks in rural development With reference to Andhra Pradesh Grameena Vikas Bank of Srikakulam district of Andhra Pradesh.

    References:

    1. K.Dinkar Rao, “ Some Planning Issues on RRBs Study” N.I.B.M, New Delhi, April, 2006, P.15.
    2. Ibid., P.26.
    3. Report of the Banking Commission, Government of India, New Delhi,, 2006, P.167.
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