By Tanya Patwal, Amity Law School, Delhi.
In India, especially the rural areas, majority of the population had no basic banking facility and had no financial services provided to them. Despite 14 private banks being nationalised in 1969, commercial-turned-national banks couldn’t cater to the rural credit needs. Thus, under an ordinance passed in 1975 on the recommendation of the Narasimham Committee and even before the Regional Rural Banks Act of 1976 came into existence, Regional Rural Banks (RRBs) were set up to provide credit for agricultural and rural activities. All Regional Rural Banks are authorized to carry on to transact the business of banking as defined in the Banking Regulation Act 1949. The following are important points explaining the formation and function of the RRBs in India: (more…)