Government Allocates Rs 6200 Crore To Boost Regional Rural Banks

Government Allocates Rs 6200 Crore To Boost Regional Rural Banks

The central government has allocated Rs 6212.03 crore to Regional Rural Banks as part of the recapitalization scheme, aimed at supporting RRBs to maintain the minimum prescribed capital-to-risk (Weighted) assets ratio of 9 percent.

Regional Rural Banks (RRBs) are commercial banks owned by the Indian government operating at the regional level across various states. RRBs were established in 1975 to provide basic banking and financial services to rural areas, particularly to small and marginal farmers, agricultural labourers, artisans, and small entrepreneurs.

The performance of RRBs has improved significantly, with a consolidated CRAR (Capital to Risk-weighted Assets Ratio) at an all-time high of 13.83 per cent as of December 31, 2023.

In FY22-23, RRBs recorded the highest-ever consolidated net profit of Rs 4,974 crores, and a net profit of Rs 5,236 crore up to the third quarter of FY 2023-24.

Similarly, credit expansion has led to an increase in the consolidated credit-deposit ratio to 72.13 per cent as of Sept 2023, the highest in the past 15 years.

This comes against a backdrop of a three-year board-approved viability plan (VP) in the financial year 2022-23, with a well-defined implementation mechanism aimed at achieving sustainable viability.

RRBs are vital for banking and financial services to rural communities, agriculture activities and small businesses.
There are 43 RRBs sponsored by 12 scheduled commercial banks in India.