Evaluating Financial Performance of Regional Rural Banks in India

Abstract

Financial institutions play a crucial role in fostering economic development within a nation. With India aspiring to achieve developed status by 2047 and having recently ascended to the fifth position in global economic power in 2024, the focus on rural development is paramount. In response to the rural credit deficit, the Narsimham committee introduced Regional Rural Banks (RRBs) on October 2nd, 1975. These banks were established with the primary aim of providing credit to rural communities, enabling them to engage in economic activities and fostering the growth of micro, small, and medium enterprises to enhance their standard of living. Like any other business entity or financial institution, RRBs operate with the objective of generating profits. Thus, it is imperative for RRBs to earn sufficient profits to cover their expenses. This research paper seeks to analyse the profit and loss trends of RRBs over a decade, spanning from 2013-14 to 2022-23. The analysis is based on secondary data collected from sources such as the annual reports of NABARD and RBI, key statistics, financial statements of RRBs, as well as relevant published books, articles, and websites.