Cabinet approves amendments to Regional Rural Banks Act, 1976

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

The amendments to the act will enhance authorized and issued capital to strengthen their capital base and to bring flexibility in the shareholding between central government, state government and the sponsor bank.

The term of the non-official directors appointed by the center will be fixed not exceeding three years.

The amendments will ensure financial stability of RRBs which will enable them to play a greater role in financial inclusion and meeting credit requirements of rural areas and the Board of RRBs will be strengthened.

Regional Rural Banks were established under Regional Rural Banks Act, 1976 (the RRB Act) to create an alternative channel to the cooperative credit structure and to ensure sufficient institutional credit for the rural and agriculture sector.

RRBs are jointly owned by the Center, the concerned state government and sponsor banks with the issued capital shared in the proportion of 50 per cent, 15 per cent and 35 per cent 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 maximum Rs 1 crore.