Overview for Economics of Rural Banking
Regional Rural Banks (RRBs) were established with the objective of strengthening rural credit structure and to extend banking services to rural areas. The RRBs have done well in the areas of branch expansion in rural areas and in providing institutional credit to the weaker sections of the society, but their performance in the areas of deposit mobilization, reserves and viability is very much discouraging. The unsatisfactory performance or RRBs is due to huge accumulated losses, poor recovery performance and increasing non-performing assets. There is a feeling that most of the RRBs are becoming non-viable in the country. Therefore, there is a need for a thorough examination of viability position of RRBs. For this purpose efforts should be made to investigate into the reasons for the operational aspects of RRBs and measure should be initiated to make them viable. In this direction, the present study is an attempt to examine the economic viability of RRBs. The book provides the comprehensive coverage of aspects relating to RRBs such as growth of deposits, advances, number of branches, reserves, cost of operation, revenues, economic viability, etc. The study is mainly based on the examination of the economic viability of two selected RRBs in A.P. The conclusions drawn and suggestions made in this study are useful for the policy makers for improving the economic viability of the RRBs and also for strengthening the rural banking system.