India is among the emerging economies when it comes to investment and development. With the pace at which developments are taking place, India will need huge funds for successfully implementing the infrastructure projects and social projects, for example, building of Chenani- Nashri tunnel and creating awareness for opening the Jan Dhan Yojana Account.
We, as a country are moving towards digitalization and the initiatives taken by our prime minister are engaging enough to make India a developed economy. Banks play a vital role in boosting the economic growth by accepting deposits from the general public and providing loans to corporates and individuals.
Geographically, the population of our country is broadly divided into rural and urban areas with nearly 2/3rd of the population of India residing in the rural areas.
After the nationalization of banks in the year 1969, people residing in rural areas still had to face problems when funds were required for emergency or for loan purpose. Lack of banking facility awareness and setting up of the bureaucracy system enabled people to avoid going to banks for financial purpose. In return, they fell victims to shrewd money lenders. Nationalization of banks proved to be inadequate for positioning the banking facilities in rural areas due to regional disparities.
Income source for the people of rural area is primarily from agricultural activities and other activities on a small scale. To help farmers, traders, artisans and other people of the rural sector, RRB was set up. RRB is an acronym for Regional Rural Banks.
An ordinance was passed in the year 1975 for the formation of regional rural banks. This ordinance was then replaced by the Regional Rural Bank Act, 1976 which set guidelines regarding formation, regulation and functioning of regional rural banks in India. The set-up of RRB was based on the recommendations provided by the M. Narasimham Working Group.
Status of every regional rural bank is that of a scheduled commercial bank. It performs the functions of accepting deposits from the public and providing loans to farmers, agriculturists, artisans and small entrepreneurs.
Regional rural banks were formed with the purpose to provide the agricultural sector and rural sector with:
- Adequate banking facility
- Credit facility
RRBs are local level banking institutions which operate in different states of the country. The objective is to serve the rural area by providing them primary banking and financial services.
The RRB Act, 1976 was passed with following motives:
- Incorporating, regulating and winding up of RRBs
- Developing agriculture, commerce, trade, industry and other activities
RRB aims to provide the following:
- Encouraging entrepreneurs and developing entrepreneurial activities
- Serve backward section and eliminate the economic disparity in our country
- Provide credit facility to people engaged in agriculture, small entrepreneurs, artisans and others.
- Enable economic growth of the rural area
- Prevent rural area people to fall in the trap of exploiting moneylenders
- Encourage people to use banking facility for their day to day needs
Every RRB is sponsored by a commercial bank, mostly a public sector bank. Sponsoring banks have to provide following assistance:
- Money under refinance assistance
- Subscribe to share capital
- Provision of staff and managerial assistance
- Guidance for investment
- Any other required assistance
This assistance period is agreed upon and provided by the sponsor bank on mutual agreement. Ideally, it is provided for a period of 5 years and the assistance is extended if required by the RRB.
The goal of “one state one RRB for each sponsor bank” was introduced by P. Chidambram, the then finance minister of India, for boosting the public sector banks to sponsor RRBs across India.
One of the most promising regional rural banks formed in the recent time is the Sarva U.P. Gramin Bank. Sarva U.P Gramin bank is a regional rural bank which came in existence on 30 November 2007.
PNB have sponsored regional rural bank (RRB) in states like Uttar Pradesh, Bihar, Himachal Pradesh, Haryana, Punjab and Rajasthan. Punjab National Bank, also commonly known as PNB, which is one of the oldest banks existing in the history of India, has taken the initiative and is a sponsor of Sarva U.P Gramin bank.
Four banks were amalgamated to form the Sarva U.P Gramin bank. The following are the 4 banks which were merged:
- Rani Laxmibai Kshetriya Gramin Bank
- Kisan Gramin Bank
- Uttar Pradesh Gramin bank
- Devi Patan Kshetriya Gramin Bank
Sarva U.P Gramin bank is headquartered in Meerut city, and performs its operations in 17 districts of UP and one branch is operated from Haridwar district, Uttarakhand.
Currently, the bank operates from 501 branches and has a turnover of Rs 10,350 Crores as of the year 2016.
Vision and mission of the Sarva U.P Gramin bank is clearly defined by its chairman, Shri. Anil Kumar Sharma and followed in its truest sense.
Vision of the Sarva U.P. Gramin Bank
- Uplifting the lives of rural citizens in our country
- Inculcate banking habits through awareness
- Offer financial and other plans with the purpose of improving quality of life
Mission of the Sarva U.P. Gramin Bank
- Use of advance technology,
- Committed and friendly workforce and
- Strive for providing services and uplifting the different sections of the society.
The share capital of the bank is Rs 6 Crores which is distributed among the Central Government, the Government of UP and PNB. The Central Govt. holds 50% stake whereas the UP Govt. hold 15% and PNB holds 35% of the stakes.
The bank offers products in various categories to the people residing in rural areas:
- Fixed and recurring deposits
- Loans for agricultural purpose
- Loans for personal, vehicle and education purpose
- Providing cash credit to farmers and small artisans
- Loans for buying a house in rural area, i.e. rural housing