Which of the following grants/grant direct credit assistance to rural households?
- Regional Rural Banks
- National Bank for Agriculture and Rural Development
- Land Development Banks
Select the correct answer using below.
[UPSC Civil Services Exam – 2013 Prelims]
(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Regional Rural Banks (RRBs) and Land Development Banks (LDBs) provide direct credit assistance to rural households.
Regional Rural Banks (RRBs)
- Established in 1975 on the recommendation of the Narsimham Committee under the Regional Rural Bank Act of 1976.
- Objective: To provide credit and banking facilities to small and marginal farmers, artisans, labourers, and small entrepreneurs in order to contribute towards the development of the rural economy.
- The first RRB was opened on 2nd October 1975 as “Prathama Grameen Bank”.
- The equity share of RRBs:
- Central Government – 50%
- State Government – 15%
- Sponsor Bank – 35%
- RRBs are controlled by the Reserve Bank of India and supervised by NABARD.
- Currently, 56 RRBs are in operation in India.
Land Development Bank (LDBs)
- Land Development Bank was earlier known as Land Mortgage Bank.
- They are cooperative institutions registered under Cooperative Societies Act.
- Objective: To provide long-term loans facility to farmers to borrow equipment such as tractors, pump sets, etc.
- The first Land Mortgage Bank was set up in Jhind, Punjab in 1920. But its real beginning was marked by the establishment in 1929 in Madras.