Consider the following statements regarding Regional Rural Banks (RRBs) in India:

(A) RRBs were set up on the basis of the recommendation of Narasimham working group, 1975
(B) The largest proportion of the equity of RRBs is held by its sponsor bank
(C) NABARD coordinates all the activities of RRBs
(D) RRBs are lead banks
(E) RRBs are provided refinance facilities through NABARD

Choose the correct answer from the options given below:

Correct option is A

The correct answer is: (A) that is (A), (C), (E) are correct only

Explanation:

RRBs were set up based on the recommendations of the Narasimham Committee (1975)

The major equity stakeholders in RRBs are the central government. Ratio of stake holdings of GoI, State government and sponsored bank is 50:15:35

NABARD (National Bank for Agriculture and Rural Development) is responsible for coordinating and regulating the activities of RRBs. It also provides financial assistance, including refinancing, to RRBs.

​RRBs are not lead banks. Lead banks are typically the major public sector banks that coordinate banking activities and develop the banking structure in a particular region.

Thus statements A, C, E are correct

Information Booster:

• NABARD is a critical financial institution in India, focused on rural development and the agricultural sector.
• Sponsor banks provide a lot of support in terms of equity, training, and technical assistance to RRBs.
• RRBs are an essential part of the Indian banking system, designed to provide affordable credit to rural populations.
• Refinance facility by NABARD helps RRBs meet credit demands in rural areas, especially during peak agricultural seasons.

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