The Regional Rural Banks Act has been incorporated on 9th February, 1976. This Act has been established to incorporate, regulate and to windup of such Regional Rural Banks with the intention to develop agriculture, trade & Commerce, Industrial and such other productive activities in the Rural Areas particularly to the small and medium farmers, laborers and such other working communities in such areas.
The Central Government shall institute and incorporate Regional Rural Banks with the assistance of the Sponsored Banks by notification in the Official Gazette, specifying the name of the Bank, Bank’s functions, the extent to which it functions, etc. Every such banks shall be a Corporate Body having a Common Seal, Perpetual Succession can and be sued in its own name. It can purchase or acquire holds or even dispose any properties and to contract as specified under the provisions of this Act. The Sponsor bank assists this Regional Rural Banks in all necessary and required duties as prescribed under the provision of this Act. Especially they subscribe the Share Capital of this Bank, provide training all person including managerial and financial functionaries in the Regional Rural Bank for the first five years from incorporation as agreed between such Sponsored Bank and the Regional Rural Bank. This period of assistance shall be extended with the recommendation by the National Bank or by the Central Governments on its own as it deems fit.
This Bank shall have its Head Office and Branch Office at any place after consultation with the National Bank and the Sponsor Bank by the Central Government by notification in the Official Gazette. The Authorized capital shall not be less than Twenty Five Lakhs and is fixed by the Central Government with consultation with the Sponsored Bank with paid-up Shares of One Hundred Rupees each. In case of Issued Capital, the Central Government shall fix in such a manner as it shall not be less than Twenty Five Lakhs and more than One Crore of the Capital issued by the Regional Rural Bank. This Issued Capital shall vary as and when it is necessary with the approval of the Competent Authority.
Inorder to act in pursuance to this Act, a Board is formed to perform such functions that are required by this Act with public interest under the General Superintendence of Management and Direction of Affairs and Business of Regional Rural Bank. This Board shall be constituted under the head of the Chairman, Two Directors, being not an Officer of any Government or Banks, etc and such other Directors appointed by the Reserve Banks, National Bank, Sponsor Bank, etc. The Central Government shall at any time increase the number of Members not exceeding fifteen. Apart from Chairman, the Directors shall hold Office for not more than two years from the date of institution of this Act. They are eligible for re-nomination. The Chairman shall hold Office for not more than five years and the Sponsor Bank shall have rights to terminate such Chairman if it feels necessary and was an Officer of the Sponsor Bank after consultation with the National Bank. In such other case they must consult with the Central Government, State Government, etc. He shall be nominated, disqualified, re-nominated, etc as prescribed under the provision of the Act.
The Board, Committees and such other association or members appointed under this Act shall perform their duties in such a manner prescribed under this Act. The Regional Rural Banks shall appoint such number of Auditors to maintain the books of Accounts with the approval of the Central Government as notified in the Official Gazette. These Books of Accounts shall consist of all material particulars of this Bank. The Annual reports prepared shall be distributed to its Shareholders and the Central Government shall submit the Auditor’s reports and Annual reports before the Houses of Parliaments for further assistance from them towards the benefits of the services rendered by the Regional Rural Bank. The Profits of this Bank after paying all debts, Depreciation, Contributions, superannuation and such other matters to be paid under the provisions of this Act, shall apportion the remaining profit by declaring Dividends to the Shareholders. The Regional Rural Banks shall get Amalgamated, Ceased its Business or even Liquidated depending on the situations required in pursuance to this Act. Not only that the Central Government shall perform any actions in pursuance to this Act as and when necessary with the approval of the Houses of the Parliaments, Higher Banks, etc, in good faith inorder to fulfill the intention of the Legislature of this enactment. This Act has also been amended at every interval when it is necessary to act in pursuance to this Act.
by C.Srivenkatesh Prabhu.