Analysing the financial performance of regional rural banks
Student name: Mr Mudit Jhamb
Guide: Dr Manipadma Datta
Year of completion: 2012
Host Organisation: Delhi School of Economics, University of Delhi
Supervisor (Host Organisation): Dr B.L Pandit
Abstract: Regional Rural Banks (RRBs) were established in 1975, following the recommendation
of the Narasimham committee with a view to create a new set of regionally oriented rural
banks which would combine the local feel and familiarity characteristic of cooperatives
and the professionalism and resource base of commercial banks. The main objective of
these banks were to meet the credit gap in rural areas, check the outflow of rural deposits
to urban areas, reduce regional imbalances and increase rural employment generation.
RRBs have played a key role in the overall development of the rural economy by
expanding its geographical coverage, client outreach and business volume. But despite
over three decades of their establishment, RRBs have achieved performance to the
expected level quantitatively but have shown signs of concern regarding financial
viability and efficiency. In order to achieve efficiency and improve the financial
performance, various reforms have been initiated by Government of India (GoI),
National Bank for Agriculture and Rural Development (NABARD) and Reserve Bank of
India (RBI). But these reforms paid little attention to the institutional problems of RRBs.
This paper attempts to analyse the financial performance of RRBs from 1991-2009. To
measure the financial soundness and efficiency, CAMEL Model is adopted.
