Which of the following grants/grant direct credit assistance to rural households?

1. Regional Rural Banks
2. National Bank for Agriculture and Rural Development
3. 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

Answer: (c)        

Explanation:

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.