Regional Rural Banks (RRBs) in India are set up with sponsorship support from which of the following?

Introduction / Context:

This question belongs to Indian banking structure and rural credit institutions. Regional Rural Banks were created to extend banking services and credit to rural and agricultural sectors, especially small and marginal farmers and rural artisans. Understanding who sponsors these banks is crucial, because the sponsor institution provides managerial, financial, and training support in the initial years of an RRB's operation.

Given Data / Assumptions:

Concept / Approach:

RRBs are established under a tripartite arrangement involving the Government of India, the concerned state government, and a sponsor bank. The sponsor bank is a public sector or nationalised commercial bank that provides initial capital, managerial assistance, and training. While State Bank of India is itself a large public sector bank and may sponsor some RRBs, the generic description used in exam questions is that RRBs are sponsored by nationalised commercial banks rather than directly by the Reserve Bank of India or the central government alone.

Step-by-Step Solution:

Verification / Alternative check:

A verification step is to recall specific examples, such as an RRB sponsored by Punjab National Bank, Bank of Baroda, or State Bank of India. All of these are public sector or nationalised commercial banks. RBI issues guidelines and supervises, while the Government of India and state governments provide policy backing and part of the capital. The term sponsorship, however, is clearly associated with a nationalised commercial bank that actively supports the RRB's operations, confirming the answer.

Why Other Options Are Wrong:

Reserve Bank of India: RBI is the central bank and regulator, but it does not act as the sponsor bank that directly sets up and manages RRBs.

State Bank of India: SBI is indeed a sponsor bank for some RRBs, but it is just one example within the broader category of nationalised commercial banks. The question seeks the generic category.

Government of India: The central government is a shareholder and policy maker in RRBs but is not described as the sponsor bank that provides operational support.

Common Pitfalls:

Candidates sometimes confuse the roles of regulator, owner, and sponsor. They may choose RBI simply because it is the apex banking authority or choose Government of India because it owns a stake. Another trap is to select State Bank of India since it is well known as a sponsor for some RRBs. To avoid these errors, focus on the general rule that RRBs are sponsored by nationalised commercial banks, of which SBI is only one example.

Final Answer:

The correct answer is Nationalised Commercial Bank.