"A Study on Analysis of Operating and Financial Performance of Regional Rural Banks in Indian context "
Authors: Kuranal Ravikumar , K Dr. Ravikumar 
Published: October 2022

The development of India's economy and rural sector depends heavily on agriculture, so it is essential to develop strategies for increasing income and creating jobs in rural areas, creating programs to reduce poverty in unbanked rural areas, and creating the right institutions and mechanisms to meet the credit needs of the rural sector. A significant step in this direction was the establishment of Regional Rural Banks (RRBs) in the middle of the 1970s. The RRBs are specialist rural financial institutions that provide small and marginal farmers, agricultural workers, artisans, and small business owners with the credit they need to grow their businesses.However, there were also commercial and cooperative banks to meet the financial needs of the rural sector. While the commercial banks' efforts to increase agricultural credit were limited by their concentration on profitability, the cooperative banks' efforts were also hindered by a number of financial difficulties. Even yet, over time, Regional Rural Banks have been able to increase their clientele, their revenue, and their ability to provide credit to the underprivileged. However, in the current environment, a number of flaws have also surfaced that have weakened their profitability and viability, such as past due, loan recovery, nonperforming assets, etc. Regional Rural Banks play a significant role in the delivery of credit in rural regions by offering credit facilities to the economically weaker segment of the population for the growth of trade, industry, and agriculture. In India's agricultural and rural development, regional rural banks are essential. Through their extensive network, the RRBS have a greater reach in India's rural areas. The financial stability of the rural areas in India is a key factor in the success of rural credit. RRBs are a crucial source of finance for rural areas, and they are in charge of providing different sorts of agriculture credit in rural areas with the loans they require. The majority of regional rural banks are currently dealing with issues including past due, recovery, nonperforming assets, and other issues. The financial performance of RRBs in India must therefore be studied. Even after 65 years of independence, 65% of the population still resides in rural areas. The strength of the rural sector is crucial to the growth of the rural economy. The Indian government has initiated and carried out a number of policy measures. However, poverty, a lack of access to clean water and sanitary services, subpar housing, high rates of illiteracy, and other comparable economic and social disadvantages continue to plague rural India. One of the fundamental engines of economic expansion is the banking sector. Given that it is a crucial link in numerous socioeconomic operations, it must be stable. The GOI established the Regional Rural Banks (RRBs) in 1975 in accordance with the requirements of the ordinance proclaimed on the 26th September 1975 with a view to thriving the rural economy. The share capital of RRBs was financed to a percentage of 50% by the Government of India, 15% by the relevant State Government, and 35% by the bank that sponsored the RRB. The RRBs can only operate in certain districts in a State that have been notified. The RRBs generally collect deposits from rural and semi-urban areas and lend money largely to small and marginal farmers, agricultural laborers, rural craftsmen, and other priority sector sectors. RRBs have more access to rural areas and are crucial to India's development of its rural areas and agriculture industry. The primary goals underlying the establishment of this sort of dynamic institution in India were to create a connection between rural households and banks, especially in banking-deficient areas. Additionally, to promote rural savings, create job possibilities, and offer more affordable loans to rural India's marginalized population.