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Q43 (CAPF/2011) Economy › Money, Banking & Inflation › Banking structure Answer Verified

Which of the following statements regarding Regional Rural Banks (RRB) in India is/are correct ? 1. The basic aim of setting up the RRBs is to develop rural economy. 2. The area of RRBs is limited to a specific region comprising one or more districts. 3. RRBs are sponsored by Commercial Banks. Select the correct answer using the code given below :

Result
Your answer: —  ·  Correct: D
Explanation

Regional Rural Banks (RRBs) were established under the Regional Rural Banks Act, 1976, following the recommendations of the M. Narasimham Working Group [c2, c5]. Statement 1 is correct as the primary objective of RRBs is to develop the rural economy by providing credit and banking facilities for agriculture, trade, and other productive activities in rural areas [c1, t1]. Statement 2 is correct because RRBs are regionally based institutions whose area of operation is limited to a notified area comprising one or more districts within a state [t6, t7]. Statement 3 is correct as every RRB is sponsored by a specific Commercial Bank, which provides managerial and financial assistance [c1, t2]. The ownership structure is shared between the Central Government (50%), the concerned State Government (15%), and the Sponsor Bank (35%) [c3, t1].

Sources

  1. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 4. Co-operative Banks: > p. 82
  2. [2] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > 9 5. Regional Rural Banks > p. 178
  3. [3] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > 9 5. Regional Rural Banks > p. 179
  4. [4] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 8: Financial Market > CHAPTER SUMMARY > p. 245
  5. [5] https://www.nabard.org/auth/writereaddata/File/RRBs.pdf
  6. [6] https://www.indiacode.nic.in/bitstream/123456789/1492/1/197621.pdf
  7. [7] https://en.wikipedia.org/wiki/Regional_rural_bank
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