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Banking & Credit :: REGIONAL RURAL BANKS


The Narasimham committee on rural credit recommended the establishment of Regional Rural Banks (RRBs) on the ground that they would be much better suited than the commercial banks or co-operative banks in meeting the needs of rural areas. Accepting the recommendations of the Narasimham committee, the government passed the Regional Rural Banks Act, 1976. A significant development in the field of banking during 1976 was the establishment of 19 Regional Rural Banks (RRBs) under the Regional Rural Banks Act‚1976.

The RRBs were established “with a view to developing the rural economy by providing, for the purpose of development of agriculture, trade, commerce, industry and other productive activities in the rural areas, credit and other facilities, particularly to small and marginal farmers, agricultural labourers, artisans and small entrepreneurs, and for matters connected therewith and incidental thereto” .

RRBs established with the explicit objective of


  • Bridging the credit gap in rural areas
  • Check the outflow of rural deposits to urban areas
  • Reduce regional imbalances and increase rural employment generation

The main objectives of setting up the RRB is to provide credit and other facilities‚ especially to the small and marginal farmers‚ agricultural labourers artisans and small entrepreneurs in rural areas.

Each RRB will operate within the local limits specified by notification.

If necessary‚ a RRB will also establish branches or agencies at places notified by the Government.

Each RRB is sponsored by a public sector bank‚ which provides assistance in several ways‚ viz., subscription to its share capital‚ provision of such managerial and financial assistance as may be mutually agreed upon and help the recruitment and training of personnel during the initial period of its functioning.



Every RRB  is authorized to carry on to transact the business of banking as defined in the Banking Regulation Act and may also engage in other business specified in Section 6 (1) of the said Act. In particular‚ a RRB is required to undertake the business of

(a) granting loans and advances to small and marginal farmers and agricultural  laborers‚ whether individually or in groups,  and to cooperative societies‚ including agricultural marketing societies‚ agricultural processing societies‚ cooperative farming societies‚ primary agricultural credit societies or farmers’ service societies‚ primary agricultural purposes or agricultural operations or other related purposes, and

(b) granting loans and advances to artisans‚ small entrepreneurs and persons of small means engaged in trade‚ commerce‚ industry or other productive activities‚ within its area of operation.

The Reserve Bank of India has brought RRB’s under the ambit of priority sector lending on par with the commercial banks. They have to ensure that forty percent of their advances are accounted for the priority sector. Within the 40% priority target, 25% should go to weaker section or 10% of their total advances to go to weaker section.

Regional Rural Banks in India


The State Bank of India is one of the major commercial banks having regional rural banks. There are 30 Regional Rural Banks in India, under the State Bank of India and it is spread in 13 states across India. The number of branches the SBI Regional Rural Banks is more than 2000. 

Several other banks, apart from the State Bank of India also functions as the promoter of rural development in India.

The other Regional Rural Banks in India are -

Haryana State Cooperative Apex Bank Limited

The main purpose of the Haryana State Cooperative Apex Bank Limited is to financially assist the artisans in the rural areas, farmers and agrarian unskilled labor, and the small rural entrepreneurs of Haryana. Haryana State Cooperative Apex Bank Limited also referred as the HARCOBANK, is one of the apex organizations in the state of Haryana. The HARCOBANK holds a special economic position in the state of Haryana. The Haryana State Cooperative Apex Bank Limited offers several types of financial assistances to the individuals. The financial aids include credit for the promotion of agriculture, non-agrarian credit, and bank deposit facilities. The HARCOBANK have been functioning as an investor for more than three decades.

National Bank for Agriculture and Rural Development

The main purpose of the National Bank for Agriculture and Rural Development is to provide credit for the development and publicity of small scaled industries, handicrafts, rural crafts, village industries, cottage industries, agriculture, etc. The NABARD also supports all other related economic operations in the rural sector, promotion of sustainable growth in the rural sector. The NABARD also plays the role of a contributor to the rural development by the means of promoting institutional development, facilitating refinance to loan providers in the rural sector, inspection, monitoring, and evaluation of client financial corporations. National Bank for Agriculture and Rural Development (NABARD) was established as the premiere rural development bank.

Sindhanur Urban Souharda Co-operative Bank

The main purpose of the Sindhanur Urban Souharda Co-operative Bank is to provide financial support to the rural sector. The Sindhanur Urban Souharda Co-operative Bank is more commonly known as the SUCO Bank.

United Bank of India

The role played by the United Bank of India (UBI) as one of the regional rural banks is phenomenal. The UBI has propagated the network of branches in order to actively take part in the rural improvement and development.

Syndicate Bank

The Syndicate Bank has it grass roots in the rural sector. The development of the Syndicate Bank was in accordance to the development of the banking sector in India and. The Syndicate Bank has performed actively in the development of the rural sector in India. 

The Regional Rural Banks in India has actively contributed to the growth of the rural sector. The growth of the rural industries in India and the development of the rural business and economy have been dependent largely on the investment and financial aids provided by the Regional Rural Banks in India.

Regional Rural Banks in Tamil Nadu


Indian Bank has sponsored two Regional Rural Banks (RRBs) viz., Saptagiri Grameena Bank and Pallavan Grama Bank.

Pallavan Grama Bank with Head Quarters at Salem is operating in 14 districts of Tamilnadu viz., Salem, Namakkal, Krishnagiri, Dharmapuri, Villupuram, Cuddalore, Coimbatore, Karur, Erode, Nilgiris, Vellore, Tiruvannamalai, Kancheepuram and Tiruvallur.

The third RRB sponsored by Indian Bank is Puduvai Bharathiar Grama Bank at Union Territory of Puducherry with its head quarters at Puducherry.


Pallavan Grama Bank
6 Yercaud road, 
Salem 636007
Tamil Nadu






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