Indian Economy :Rural Banks


Regional Rural Banks (RRBs) had been established to take the banking services to the doorsteps of rural masses especially in remote rural areas with no access to banking services. These banks were originally intended to provide institutional credit to those weaker sections of the society at concessional rate of interest, who depend on private money-lenders. The banks were also intended to mobilise and channelise rural savings for supporting productive activities in the rural areas. However, with effect from 22 March 1997, the RRBs were allowed to lend outside the target group by classifying their advances into ‘Priority Sector’ and ‘others’. Similarly the interest rates on term deposits offered by RRBs have also been freed. Subsequently, it has been decided to permit RRBs at their discretion to offer differential rate of interest on their term deposits of maturity subject to certain conditions. The credit outstanding of all the 196 RRBs stood at Rs. 32,870 crore as at the end of March 2005 and Rs. 62,143 crore was mobilized as deposits by RRBs till that date.

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