An Annual Review Meeting of Regional Rural Banks (RRBs) was held on 25th July, 2010 under the chairmanship of Finance Minister. Review of the status of Financial Inclusion was one of the Agenda of the review meeting. The issues discussed in the review meeting, inter-alia, included the following:
- Credit Flow to Agriculture;
- Current Viability;
- Non-Performing Assets (NPA) position;
- Capital-To-Risk-Weighted Assets Ratio (CRAR) position;
- Crore Banking Solutions (CBS) IN RRBs;
- Branch Expansion of RRBs, etc.
As on 31 March 2010, there were 82 RRBs with a network of 15475 branches spread over 619 districts in 26 States and 1 Union Territory. The following measures have been initiated to expand the outreach of the RRBs:
- The RRBs were given a target in 2007 to open 2000 branches by March, 2011;
- RRBs are required to migrate to Core Banking Solution (CBS) by September 2011 (As on date, 21 RRBs have already achieved 100% CBS status);
- The Sponsor Banks would provide the required support to the RRBs sponsored by them for this purpose;
- For up gradation of Technology for Financial Inclusion, the RRBs are being provided funds from Financial Inclusion Fund (FIF) and Financial Inclusion Technology Fund (FITF) by NABARD.
As on 31.03.2010, 3 RRBs out of 82 RRBs were incurring losses. (Manipur Rural Bank –Rs. 2.98 crore, Puduval Bharthiar Grama Bank –Rs. 0.22 crore and Mahakaushall Gramin Bank- Rs. 2.45 crore)
The profitability of RRBs, as a segment, has been improving. However, some of the factors responsible for losses in RRBs are identified as : low recovery, high NPA, low business level, low productivity per branch and per staff, high cost structure, poor financial management, limited area of operation, non-viable level of operation in branches located in resource-poor areas etc. Further, one of the RRBs, namely Puduval Bharthiar Grama Bank, which was set up in March 2008, has not yet reached a breakeven point;
This information was given by the Minister of State for Finance Sh. Namo Narain Meena in a written reply to an Unstarred Question raised in Rajya Sabha today.
