RRB (regional rural banks)

• PSBs will get to sever ties with RRBs
• The government may allow public sector banks to exit from regional rural banks, or RRBs, they sponsored if they are not keen on investing more capital into these dedicated lenders.
• The suggestion to let banks move out of RRBs had come up during deliberations on the report of an expert panel set up to suggest measures to strengthen the rural banks. There are 82 RRBs in the country with a network of 15,475 branches.  The country’s largest lender, State Bank of India, alone sponsored 17 RRBs. While the Centre owns 50% stake in an RRB, the sponsoring bank holds 35% and the concerned state government the remaining 15%.
• The Chakrabarty committee has observed in its report that states are also reluctant to infuse more capital in the expansion of RRBs as they are not fetching them good dividends.

• What is a deep discount bond?
• A deep-discount bond is a bond that sells at a discount from the par value. Often, these bonds have very low coupon or interest rates. In some cases, it is zero and also called zero coupon bonds. Such bonds are considered riskier and hence, the discount in order to attract the investor. Though these bonds carry lower coupon rates, they provide call
  option to investors. This provides liquidity to the bond. In India, the deep-discount bond was first issued by term-lending institutions like IDBI around early 1990s to finance long-term development projects.