Published Paper Details:

This paper provides a qualitative and descriptive analysis of the historical evolution of Regional Rural Banks (RRBs) in India, examining the inherent conflict between their foundational mandate of social viability and the subsequent necessity for financial profitability. Employing secondary data from the authoritative sources like NABARD, RBI, and scholarly literature, the study traces the transformation of RRBs through distinct historical phases. The analysis reveals that during the "inception and expansion" phase (1975-1990), RRBs successfully fulfilled their social objective by promoting financial inclusion into unbanked rural areas. Although, this focus led to widespread instability in the financial performance and sustainability of RRBs. In response, a series of structural reforms were implemented to ensure survival. These reforms have encouraged the commercialization, diversification, and expansion of RRBs into more lucrative markets and transformed the systemic losses into significant profits. However, the study concludes that this shift towards profitability has fundamentally altered the operational character of RRBs, causing them to deviate from their original philosophy of social banking.