On November 1, 2020, the Central Government has provided Rs 670 crore to Regional Rural Banks (RRBs) in order to raise the Capital to Risk (Weighted) Assets Ratio (CRAR) of about one-third of the 43 RRBs who are suffering losses especially from north-eastern and eastern regions and need funds to meet regulatory capital requirement of 9%. This infusion would take care of their capital needs till March 31, 2021.
- As of end March 2020, 17 out of the 45 RRBs had CRAR of less than 9%, of which six RRBs had negative CRAR.
Current Criteria of Recapitalization of RRBs:
As per the current scheme for recapitalisation of RRBs, the Centre, concerned state governments and the sponsor banks provides capital support in the ratio of 50:15:35, respectively to enable them to meet the regulatory requirement of CRAR.
NABARD Data shows Losses by RRBs
–In accordance with National Bank for Agriculture and Rural Development (NABARD), RRBs as a group reported net loss of Rs 2,206 crore in the FY20, as against Rs 652-crore net loss in FY19.
–Gross non-performing assets (NPAs) as a percentage of gross loans outstanding of RRBs marginally declined to 10.4 % as on March 31, 2020, from 10.8% as on March 31, 2019
–Deposits and advances of RRBs increased by 10.2% and 9.5%, respectively during FY2019-20.
–Priority sector loans (PSL) constituted 90.6% or Rs 2.70 lakh crore of the gross loans outstanding of RRBs as on March 31, 2020.
–Share of agriculture and MSME sectors in total loan outstanding stood at 70% and 12% respectively.
Recent Related News:
i.Karnataka Vikas Grameena Bank (KVGB) launched Vikas Laghu Suvarna, a special gold loan scheme with a reduced interest rate of 7.25%. The bank has slashed the interest rate to provide easy and affordable credit at cheap cost to the customers in need, considering the pandemic situation in the country.
ii.On September 19, 2020, State Bank of India (SBI) initiated “Mahila Atmanirbharshil Aachani (Women Self-Reliance programme)” in Assam on the lines of the Atmanirbhar Bharat Abhiyanto accelerate Self Help Group (SHG) finance in a mission mode,. In this regard, SBI branches of Assam sanctioned 856 SHGs sponsored by NRLM with financial outlay of Rs. 38 crore.
About Regional Rural Banks (RRBs):
Formulated under the RRB Act, 1976, these banks aim to provide credit and other facilities to small and marginal farmers, agricultural labourers, micro and small enterprises (MSMEs), artisans and weaker sections of the society in rural areas.
- They are mandated to provide 75% of their total credit under PSL.