Having recapitalised the regional rural banks (RRBs) by over Rs. 1,700 crore, the Central Government on Tuesday decided to set up a committee to assess the need for further capital infusion.
Briefing the media here after the performance review meeting of RRBs, Finance Minister Pranab Mukherjee said: “A committee will be set up to assess the capital requirement of regional rural banks so that these entities can achieve capital adequacy ratio of seven per cent.”
The Finance Minister pointed out following the recapitalisation of over Rs. 1,700 crore, most of the 84 RRBs, except five, were profitable. “It has been agreed that all RRBs could be profitable by 2010,” he said. Already, there had been a significant improvement in their position with the gross and net non-performing assets of these RRBs coming up to acceptable levels.
Core banking
Mr Mukherjee also noted that a target had been set to open 2,000 new branches in the next two years to expand the reach of bank lending in rural areas. Alongside, the RRBs would switch to core banking solutions by the end of 2010-11, he said.
Earlier, in his inaugural address at the meeting which was also attended by Minister of State Namo Narain Meena, Finance Secretary Ashok Chawla and other senior officials of the Ministry, the Reserve Bank of India, NABARD and chairmen of RRBs, Mr. Mukherjee said that these banks were a vital and integral segment of the country’s banking system. Their focus on providing efficient financial services in the rural areas for the purpose of development of agriculture, trade, commerce and industry and other productive activities in the target areas had resulted in credit reaching a large populace in the rural areas. Nearly 70 per cent of the credit disbursed by the RRBs had gone to the farm sector, having disbursed a total credit of Rs. 38,582 crore and Rs. 41,220 crore during 2007-08 and 2008-09, respectively.
The Finance Minister exhorted the RRB chiefs to go forward and expand their branch networks to increase their outreach to ensure that no habitation suffered from lack of access to banking facilities.
