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C. Rangarajan flags declining number of Regional Rural Banks
Why in News?
C. Rangarajan flags declining number of Regional Rural Banks
C. Rangarajan has criticised the shrinking number of Regional Rural Banks through mergers and urged the RBI to incentivise Small Finance Banks for rural credit outreach.
Why it matters: factual, Prelims-type
What you need to know
2 min read
Former RBI Governor C.
Rangarajan has flagged the steady reduction in the number of Regional Rural Banks (RRBs) through mergers as 'a step in the wrong direction', arguing it could hurt last-mile credit delivery in rural areas.
He has urged the RBI to instead incentivise Small Finance Banks (SFBs) to expand rural outreach.
RRBs were originally set up under the Regional Rural Banks Act, 1976 to extend credit to farmers, agricultural labourers and rural artisans.
Sources: Topper IAS editorial (PIB / The Hindu / Indian Express)
Key facts
Remember these
- Regional Rural Banks
- Regional Rural Banks Act 1976
- Small Finance Banks
- rural credit
Prelims · Mains
How the exam will ask it
Prelims
- Regional Rural Banks, Regional Rural Banks Act 1976, Small Finance Banks, rural credit
Mains
Use as an example in GA answers (GS3 - Economy: rural banking, financial inclusion institutions).
Quick recall
Answer before you reveal
Regional Rural Banks, whose declining numbers through mergers have been criticised by C. Rangarajan, were established under which legislation?
- The Banking Regulation Act, 1949
- The State Bank of India Act, 1955
- The NABARD Act, 1981
- The Regional Rural Banks Act, 1976
Show answer
Answer: D — Regional Rural Banks were established under the Regional Rural Banks Act, 1976, to extend institutional credit to farmers, agricultural labourers and rural artisans.
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