Study on Performance of Regional Rural Banks in India

The paper has studied the performance of Regional Rural Banks (RRBs) in India. Covering 23 states of India for which published data were collected from the journal “Statistics of Regional Rural Banks”, published by NABARD, for the period 1991–92 to 2000–2001. The data were subjected to different analytical techniques, such as compound growth model, principle component analysis, discriminate function analysis. As on 31 March, 2001, there were 196 RRBs operating in 501 districts with a network of 14313 branches. Their outstanding advances stood at 1581630 lakh and the total deposit amounted to 3827186 lakh. The principal component analysis revealed that the RRBs perform broadly in four dimensions: (i) structure of ‘lending’, (ii) ‘depth of lending’, (iii) ‘physical dimensions’, and (iv) ‘spread and coverage’. In the study, each state was ranked and grouped into relatively good performing and relatively poor performing states. According to this analysis, Nagaland, Assam, Jammu & Kashmir, Tripura, West Bengal, Bihar, Manipur, Punjab, Andhra Pradesh, Mizoram and Himachal Pradesh were grouped as relatively poor performing states and their composite score ranged from -50.4 to 23.58. Maharashtra, Uttar Pradesh, Odisha, Madhya Pradesh, Kerala, Haryana, Karnataka, Gujarat, Meghalaya, Rajasthan, Tamil Nadu and Arunachal Pradesh were grouped as relatively good performing states with a composite score ranging from 26.47 to 87.83. The study has reported some policy implications also.