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THE REGIONAL RURAL BANKS ACT, 1976

Title : THE REGIONAL RURAL BANKS ACT, 1976

Year : 1976



(1) The Central Government may, if requested so to do by a Sponsor Bank, by notification in the Official Gazette, establish in a State or Union territory, one or more Regional Rural Banks with such name as may be specified in the notification and may, by the said or subsequent notification, specify the local limits within which each Regional Rural Bank shall operate.

(2) Every Regional Rural Bank shall be a body corporate with perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold and dispose of property and to contract and may sue and be sued in its name.

1*[(3) It shall be the duty of the Sponsor Bank to aid and assist the Regional Rural Bank, sponsored by it, by-

(a) Subscribing to the share capital of such Regional Rural Bank;

(b) Training personnel of such Regional Rural Bank; and

(c) Providing such managerial and financial assistance to such Regional Rural Bank 2[***], as may be mutually agreed upon between the Sponsor Bank and the Regional Rural Bank:
3[***]]

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1. Substituted for sub-section (3) by Act 1 of 1988, w.e.f. 28-9-1988, which earlier read as follows:

"(3) It shall be the duty of the Sponsor Bank to aid and assist the Regional Rural Bank, sponsored by it, by subscribing to the share capital of such Regional Rural Bank, recruitment and training of personnel during the first five years of the functioning of the Regional Rural Bank and providing such managerial and financial assistance as may be mutually agreed upon between the Sponsor Bank and the Regional Rural Bank".

2. Omitted by the Payment and Settlement Systems (Amendment) Act, 2015 for the following : - "during the first five years of its functioning"

3. Omitted by the Payment and Settlement Systems (Amendment) Act, 2015 for the following :-

"Provided that the Central Government may, either on its own motion or on the recommendation of the National Bank, extend the said period of five years by such further period, not exceeding five years at a time, subject to such conditions as it may deem fit to impose."

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(1) A Regional Rural Bank shall have its head office at such place in the notified area as the Central Government may, after consultation with the 1*[National Bank] and the Sponsor Bank, specify by notification in the Official Gazette.

(2) A Regional Rural Bank may, if it is of opinion that it is necessary so to do, establish its branches or agencies at any place in the notified area.

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1. Substituted for "Reserve Bank" by Act 1 of 1988, w.e.f. 28-9-1988.

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The authorised capital of each Regional Rural Bank shall be 3*[two thousand crore of rupees, divided into two hundred crore of fully paid-up shares of ten rupees each]:

Provided that the Central Government may, after consultation with the 1*[National Bank] and the Sponsor Bank, increase or reduce such authorised capital; so, however, that the authorised capital shall not be reduced below 4[one crore of rupees, and the shares shall be, in all cases, fully paid-up shares of ten rupees each].

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1. Substituted for "Reserve Bank" by Act 1 of 1988, w.e.f. 28-9-1988.

2. Substituted for "one crorc of rupees, divided into one lakh", by Act 1 of 1988, w.e.f. 28.9.1988.

3. Substituted by the Payment and Settlement Systems (Amendment) Act, 2015 for the following : - "2*[five crores of rupees dividend into five lakhs] of fully paid-up shares of one hundred rupees each"

4. Substituted by the Payment and Settlement Systems (Amendment) Act, 2015 for the following : - "twenty-five lakhs of rupees, and the shares shall be, in all cases, fully paid-up shares of one hundred rupees each"

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1*[(1) The issued capital of each Regional Rural Bank shall, in the first instance, be such as may be fixed by the Central Government in this behalf, but it shall in no case be less than 3*[one crore of rupees].]

(2) Of the capital issued by a Regional Rural Bank under subsection (1), fifty per cent shall be subscribed by the Central Government; fifteen per cent by the concerned State Government and thirty-five per cent by the Sponsor Bank.

4*[Provided that in case the Regional Rural Bank raises its capital from sources other than the Central Government or the State Government or the Sponsor Bank, the shareholding of the Central Government and the Sponsor Bank shall not be less than fifty-one per cent.:

Provided further that the Central Government shall consult the concerned State Government if the level of shareholding in the Regional Rural Bank of such State Government is reduced below fifteen per cent.]

4*[(2A) The Central Government may, in consultation with the Sponsor Bank and the State Government, by notification, either raise or reduce the limit of shareholding of the Central Government, the State Government or the Sponsor Bank specified in sub-section (2):

Provided that the Central Government shall consult the concerned State Government before reducing the limit of shareholding of such State Government.]

(3) The Board may, after consultation with the 2*[National Bank] the concerned State Government and the Sponsor Bank and with the prior approval of the Central Government, from time to time, increase the issued capital of the Regional Rural Bank; and, where additional capital is issued, such capital shall also be subscribed in the same proportion as is specified in sub-section (2) 4*[or, as the case may be, notified by the Central Government under sub-section (2A)].

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1. Substituted for sub-section (1) by Act 1 of 1988, w.e.f. 28-9-1988, which earlier read as follows:

"(1) The issued capital of each Regional Rural Bank shall be twenty-five lakhs of rupees".

2. Substituted for "Reserve Bank" by Act 1 of 1988, w.e.f. 28-9-1988.

3. Substituted by the Payment and Settlement Systems (Amendment) Act, 2015 for the following : - "twenty-five lakhs of rupees or exceed one crore of rupees"

4. Inserted by the Payment and Settlement Systems (Amendment) Act, 2015.

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Notwithstanding anything contained in the Acts hereinafter mentioned in this section, the shares of a Regional Rural Bank shall be deemed to be included among the securities enumerated in Section 20 of the Indian Trusts Act, 1882 (2 of 1882), 1[***]
 
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1. Omitted by the Banking Laws (Amendment) Act, 2012 for the following : - "and shall also be deemed to be approved securities for the purposes of the Banking Regulation Act, 1949 (10 of 1949)."
 
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Last updated on August, 2016

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