New Delhi: Government Thursday approved amendments in the Regional Rural Banks (RRBs) Act, 1976 which seeks to enhance their capital base and to fix the maximum term of government appointed non-official directors at two years.
"The Union Cabinet today gave its approval to the proposed amendments in the Regional Rural Banks (RRBs) Act, 1976 to enhance authorised and issued capital to strengthen their capital base," Information and Broadcasting Minister Manish Tewari told reporters here.
"The term of the non official directors appointed by the Central Government is proposed to be fixed not exceeding two years," he added.
According to the official statement issued here after the Cabinet meeting, the proposed amendments will ensure financial stability of RRBs which will enable them to play a greater role in financial inclusion and meet the credit requirements of rural areas and the Boards of RRBs will be strengthened.
RRBs were established under Regional Rural Banks Act, 1976 to create an alternative channel to the 'cooperative credit structure and to ensure sufficient institutional credit for the rural and agriculture sector.
RRBs are jointly owned by Centre and States and sponsor banks, with the issued capital shared in the proportion of 50 percent, 15 percent and 35 percent, respectively.
As per provisions of the Regional Rural Banks Act, 1976 the authorised capital of each RRB is Rs five crore and the issued capital is a maximum Rs one crore.