A Study on the Performance of Regional Rural Banks (RRB’s) in India before and after Amalgamation

After 65 years of independence, still 65 per cent of total population lives in rural areas. The upliftment of rural economy is largely depending upon the strength of the rural sector. Several policy measures have been initiated and implemented by the Government of India. But still rural India is languishing under poverty, inadequate health care facilities scanty sanitary and drinking water accessibility, poor housing, mass illiteracy and much other similar type of economic and social handicaps. The Banking industry is one of the basic instruments of economic growth. It must be on a sound footing as it constitutes an important link in various socio-economic activities. With a view to flourishing the rural economy, the GOI has established the Regional Rural Banks (RRBs) in 1975 under the provisions of the ordinance promulgated on the 26th September 1975. The Government of India, the concerned State Government and the bank, which had sponsored the RRB contributed to the share capital of RRBs in the proportion of 50%, 15% and 35%, respectively. The area of operation of the RRBs is limited to notified few districts in a State. The RRBs mobilize deposits primarily from rural/semi-urban areas and provide loans and advances mostly to small and marginal farmers, agricultural laborers, rural artisans and other segments of priority sector. In this paper, an effort has been made to analyze the performance of RRBs in pre and post-consolidation. The study is diagnostic and exploratory in nature and makes use of secondary data. The study finds and concludes that the Regional Rural Banks (RRBs) have significantly improved their working performance after amalgamation.