Examples of Local Area Banks in India
1. Krishna Bhima Samruddhi Local Area Bank: It was established in 1999 for the regions of Krishna and Bhima in Andhra Pradesh and Telangana. It has 50 branches and offers various products and services such as deposits, loans, remittances, insurance, etc. Because they are set up in rural areas, their main focus is on agriculture and rural finance.
2. Coastal Local Area Bank: It operates in coastal regions of Karnataka. It is mainly formed to solve the financial needs of fishing communities in coastal regions.
3. Capital Local Area Bank: This bank serves the state of Punjab. It supports agriculture and rural development, contributing to the state’s economic growth.
4. Subhadra Local Area Bank Ltd.: This bank was established on 30th March 1998. Its area of operation includes three contiguous districts viz. Kolhapur, Sangli and Satara in Maharashtra. It has 40 branches and offers various products and services such as deposits, loans, remittances, insurance, etc.
Local Area Banks | Full Form of LAB, Features, Objectives and Functions
Local Area Banks are such banks that are set up for a small area and operate in that area. Local Area Banks function just like the other big banks, which means completing the financial requirements, for example, storing money, lending money, withdrawing money, etc., of the area that’s provided to each Local Area Bank. Local Area Banks are also referred to as LAB. The full form of LAB is Local Area Bank.
Local Area Banks started in India in 1996, as a scheme of the union budget to make small private banks for people in those areas who don’t have access to banks. They are regulated by guidelines of the Reserve Bank of India, which was set up in August 1996. LABs are required to have a minimum paid-up capital of Rs. 5 crore, with 25% contributed by the promoter group and the rest by the public. The license of these banks is issued by RBI. The first four banks that were issued in 1996-1997 were Coastal Local Area Bank Ltd., Krishna Bhima Samruddhi Local Area Bank Ltd., Capital Local Area Bank Ltd., and Subhadra Local Area Bank Ltd.