Difference between RRB and Commercial Banks

RRB also known as Regional Rural Bank and commercial banks performs quite similar functions, however there is some difference between the two. Let’s look at the difference between RRB and commercial banks –

  1. While the main reason behind the existence of RRB is the development of rural and backward areas, and also providing banking facility to rural population whereas the main reason behind the existence of commercial banks is to make profits out of their operations.
  2. Scope of RRB is limited to agriculture finance, small sector loans, handicrafts and other small sector loans, whereas scope of commercial banks is wide and it not only provides agriculture finance but also housing loan, car finance, letter of credit, credit to big companies and for many activities.
  3. RRB is present in rural and semi urban areas only whereas commercial banks do operations in all over the country that is rural, semi urban and urban areas.
  4. While the focus of RRB is more on accepting deposits and granting of loans to the people whereas the focus of commercial banks apart from lending and borrowing is on many other services like stock broking, asset management, insurance, merchant banking, venture capital financing, foreign exchange related business etc…
  5. Stakeholders of RRB include government of India, state government and commercial banks whereas stakeholders of commercial banks are public, central government etc…
5 comments… add one
  • sweta

    thank u very much ….. differentiation between rrb nd commercial bank is given nicely

  • Godfred

    Nice and simple to understand.. Thanks guys

  • Nilutpal Nath

    Thank you ….nicely and simply mention the differences RRBs and Commercial Bank…

  • Bibhuti Ray

    The Capital of Nationalised Banks are owned by GOVT and Public.
    The capital of RBI is owned by Central Govt-50%, State Govt-15% and sponsor Bank- 35%

  • srinivas

    clear explanation..thank you…..

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