Regional Rural Banks and Rural Credit-Some Issues

Some Issues T K Velayudham V Sankaranarayanan Regional rural banks (RRBs), an innovative feature of Indian banking, have in the last few years been at the centre of controversy. The issues involved in the controversy include the non-viability of the RRBs and the question of parity of their staffs' pay scales and service conditions with those of commercial banks. One influential view that emerged advocated merger of the RRBs with their sponsor banks. However many other important issues involved have been, by and large, glossed over. This paper takes stock of the role and problems of these banks in perspective and draws inferences to aid policy formulation.