Amendments to Regional Rural Banks (RRBs) Act, 1976
The Union Cabinet on 31st January 2013 gave its
approval to the proposed amendments in the Regional Rural Banks (RRBs) Act,
1976 to enhance authorized and issued capital to strengthen their capital
base. The term of the non official directors
appointed by the Central Government is proposed to be fixed not exceeding two
years.
The proposed amendments will ensure financial stability of RRBs
which will enable them to play a greater role in financial inclusion and meet
the credit requirements of rural areas and the Boards of RRBs will be
strengthened.
Background
Regional Rural Banks (RRBs) 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 Government of India, the concerned
State government and sponsor banks, with
the issued capital shared in the proportion of 50 percent, 15 percent
and 35 percent, 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 a maximum Rs. 1 crore
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