The All Kerala Gramin Bank Staff Federation (AKGBSF) has said the proposed amendment of the Regional Rural Bank (RRB) Act 1976 will pave the way for the privatisation of the RRBs in the country.

Federation president C.P. Narendran said in a statement here on Friday that Finance Minister P. Chidambaram, while introducing the RRB Act amendment Bill on April 22, suggested that the amendment was to raise the authorised capital of the RRBs from the existing Rs.1,00,000,00 to Rs.500,00,000,00. The increase in the authorised capital had been a long-pending demand of the RRB employees as well as experts in rural development, he said.

The federation had also been demanding the formation of the National Rural Bank of India with State-level RRBs as its constituents, he said.

But apart from this, the Bill proposed to reduce the share of the Central government and sought a 51 per cent support from the existing 85 per cent.

It proposed to hold discussions with the State governments to reduce their share from the existing 15 per cent. The statement said presently there were 17,000 branches of the RRBs with 75,000 employees. The total business earning of the RRBs was Rs.3.5 lakh crore and their total profit was more than Rs.2,500 crore, he said. The ones benefitting from the Bill would be private monopolies and corporates, Mr. Narendran said. The rural credit system would be jeopardised and the amendment would affect the rural banking system including the Direct Benefit Transfer in the Mahatma Gandhi National Rural Employment Guarantee Programme, he said.