Punjab Gramin Bank is a Regional rural bank. Regional rural banks (RRB) were established in India in 1975, as per the recommendation of the Narasimha committee on inclusion of the rural sector in India’s mainstream banking system. The committee opined that RRBs would serve all the banking needs of the rural areas which the commercial or even co-operative banks weren’t able to do. RRBs were thus established based on the ordinance that was passed on 26th September 1975. Subsequently the RRB act, 1976 was passed, post which around 25 RRBs were established in India within a year. The first of such RRBs was called as the ‘Prathama Gramin Bank’ which was established on 2nd October 1975 in Moradabad in UP. Along with the Prathama bank, five other RRBs were also setup on the same day. The RRB Act, 1976 authorizes the central government to establish one or more RRBs in state or union territory as per the requirement stated by the sponsor bank. Now the RRBs were owned jointly by three entities – Central government (50%), State Government (15%) and Sponsor Bank (35%). A sponsor bank is basically a commercial bank. Initially in 1975 there were five commercial banks which acted as the sponsor bank; they were Punjab National Bank, SBI, Syndicate bank, Union bank of India and United Commercial bank. The sponsor bank apart from contributing to the share capital of the RRB, also helps the RRB in its establishment, recruitment, operations and general management. It normally aids the RRB during the first 5 years of the RRB’s operations. The day-to-day functioning of the RRB is managed and governed by the Board of Directors. The Board of Directors at any RRBs consists of the Chairman as nominated by the Central government, three directors as nominated by the central government, maximum two directors as nominated by the respective state government and maximum three directors as nominated by the sponsor Bank.