Question 1

In which year were Regional Rural Banks (RRBs) first established in India?

Accepted Answer

1975. RRBs were first established on October 2, 1975, through an ordinance. This initiative was based on the recommendations of the Narasimham Working Group. The primary objective was to provide institutional credit to the rural poor.

Question 2

Which of the following acts governs the functioning of Regional Rural Banks?

Accepted Answer

RRB Act 1976. The RRB Act of 1976 provides the legal framework for the organization and operation of these banks. It was enacted to replace the 1975 ordinance that originally created them. The act defines the shareholding pattern and area of operations.

Question 3

What is the share of the Central Government in the equity of a Regional Rural Bank?

Accepted Answer

50%. The Central Government holds a 50% stake in the equity of every RRB. The remaining equity is split between the Sponsor Bank and the State Government. This structure ensures coordinated development at both national and local levels.

Question 4

The shareholding of the Sponsor Bank in a Regional Rural Bank is fixed at?

Accepted Answer

35%. The Sponsor Bank contributes 35% to the total equity of a Regional Rural Bank. It provides technical and managerial assistance during the initial years. A single public sector bank usually sponsors several RRBs.

Question 5

The shareholding of the State Government in the equity of an RRB is?

Accepted Answer

15%. The concerned State Government holds a 15% share in the Regional Rural Bank's capital. This ensures that the bank aligns its activities with the state's rural development priorities. The capital structure is unique to the RRB model.

RRBs & Co-operative — Set 1