FM Nirmala Sitharaman to review performance of RRBs post-Budget session

New Delhi: Finance Minister Nirmala Sitharaman during the Monsoon session of the Parliament, in New Delhi, Friday, July 26, 2024. (Photo: PTI)

3 min read Last Updated : Jul 29 2024 | 6:48 PM IST

Union Finance Minister Nirmala Sitharaman will review the performance of Regional Rural Banks (RRBs) after the Budget session of Parliament, according to two people directly familiar with the matter.

“The Finance Minister will review the performance of RRBs post August 13, 2024. The review will include discussions on enhancing the digital capabilities of RRBs,” said a senior government official.

The Regional Rural Banks (RRBs) were established in 1975 under the provisions of the Ordinance promulgated on September 26, 1975, and the Regional Rural Banks Act, 1976.

An email query sent to the Finance Ministry did not elicit any response until the time of going to press.

Earlier, bank employee associations demanded the Finance Minister to merge RRBs with their respective sponsor banks to ensure overall efficiency and viability of the banking sector.

“Competition among public sector banks and RRBs is leading to the wastage of scarce financial resources by offering the same types of services. Despite this, a large chunk of our rural population is being denied the benefits of technology-driven, up-to-date banking products. Merging RRBs with sponsor banks will ensure the delivery of a uniform product range to the entire clientele, accelerating the growth of the rural economy and prioritising sector lending, which is crucial for the government’s plan for robust Indian economic growth,” said a joint statement addressed to Sitharaman by the All India Bank Officers’ Confederation and the All India Bank Employees Association, representing more than 6 lakh bank employees.

As of March 31, 2023, there were 43 RRBs sponsored by 12 Scheduled Commercial Banks, with 21,995 branches and operations extending to 30.53 crore deposit accounts and 2.90 crore loan accounts in 26 states and 3 Union Territories (Puducherry, Jammu and Kashmir, and Ladakh). The states of Goa and Sikkim do not have RRBs. All public sector banks, except Punjab and Sind Bank, sponsor one or more RRBs. J&K Bank is the only private sector bank to sponsor an RRB. About 92 per cent of the RRB branches are in rural/semi-urban areas.

The total business size of RRBs crossed the significant milestone of Rs 10 trillion during FY 2022-23, growing at 10.1 per cent year-on-year (Y-o-Y).

The asset quality position of RRBs during FY 2022-23 showed improvement, with the gross NPA reducing to 7.28 per cent as of March 31, 2023, the lowest in the previous seven years. Thirty-four of the 43 RRBs reported a reduction in absolute gross NPA (amount), and 37 RRBs reported a reduction in the percentage of GNPA. The net NPA and provisioning coverage ratio (PCR) also improved during FY 2022-23, standing at 3.2 per cent and 59.2 per cent, respectively, as of March 31, 2023.

First Published: Jul 29 2024 | 6:48 PM IST

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