RAS question
Regional Rural Banks (RRBs) were established under:
Correct answer: (A) RRB Act, 1976.
Regional Rural Banks were established under the Regional Rural Banks Act, 1976, after an initial ordinance route in September 1975.
Explanation
Regional Rural Banks are not ordinary commercial banks created under a general banking law; their legal basis is the Regional Rural Banks Act, 1976. The Department of Financial Services states that RRBs were established under the provisions of this Act to create an alternative channel to the cooperative credit structure and expand institutional credit for agriculture and the rural sector. The chronology is important: the first RRB was set up on 2 October 1975 under an ordinance promulgated on 26 September 1975, and the system began with five RRBs in 1975. The exam trap is therefore the difference between the temporary ordinance that started the process and the permanent Act under which RRBs are established and operate.
Why the other options are wrong
- (B) The Regional Rural Banks Ordinance, 1975 was the initial temporary instrument, but the permanent statutory basis asked by the question is the RRB Act, 1976.
- (C) The SBI Act, 1955 concerns the State Bank of India, while RRBs have their own separate statutory framework.
- (D) The Banking Regulation Act, 1949 is a general banking law, whereas RRBs were established under the specific Regional Rural Banks Act, 1976.
Concept
This tests financial inclusion institutions and the legal architecture of rural credit. RAS repeats such questions because rural banking, agriculture credit and institutional finance sit at the intersection of Indian Economy and Rajasthan-focused development policy.