A COMPARATIVE STUDY OF REGIONAL RURAL BANKS: INTRODUCTION

INTRODUCTION

Chhattisgarh is agricultural based state and its maximum population stays in rural area. The RRBs have plays an important role in agricultural financing. Regional Rural Banks were established under the provisions of an Ordinance promulgated on the 26th September 1975 and the RRB Act, 1976 with an objective to ensure sufficient institutional credit for agriculture and other rural sectors. The RRBs mobilize financial resources from rural / semi-urban areas and grant loans and advances mostly to small and marginal farmers, agricultural labourers and rural artisans. The area of operation of RRBs is limited to the area as notified by GoI covering one or more districts in the State.

RRBs are jointly owned by GoI, the concerned State Government and Sponsor Banks; the issued capital of a RRB is shared by the owners in the proportion of 50 Percent, 15 Percent and 35 Percent respectively. RRBs started their development process on 2nd October 1975 with the formation of a single bank (Prathama Gramin Bank). GOI initiated the process of structural consolidation of RRBs by amalgamating RRBs sponsored by the same bank within a state as per the recommendations of the Vyas Committee (2004). The RRBs in Chhattisgarh have had a long standing of nearly more than thirty years. The main objective of these institutions has been to promote the agricultural sector. But as the time passed by they were made to accept the functions of sponsor, commercial and Nationalized Banks. The RBI and NABARD undertook a bailout programme through the sponsor bankers. Added to this, they were subject to amalgamation that means 196 banks were reduced to 82 and in Chhattisgarh itself 5 banks were reduced to 3 banks. At present in Chhattisgarh three RRBs functioning – Chhattisgarh Gramin Bank (CGB), Sarguja Kshetriya Gramin Bank (SKGB) and Durg Rajnandgaon Gramin Bank (DRGB).