Patna: Union Finance Minister Nirmala Sitharaman conducted a comprehensive review meeting in Patna on Friday to assess the performance and future direction of eight Regional Rural Banks (RRBs) from Bihar, Jharkhand, Odisha, and West Bengal. The session highlighted the crucial role of RRBs in fostering rural economic growth and focused on enhancing credit flow, promoting digital adoption, and improving financial inclusion.
The meeting was attended by Bihar Deputy Chief Minister Samrat Choudhary, Secretary of the Department of Financial Services (DFS) M. Nagaraju, officials from the Reserve Bank of India (RBI), NABARD, SIDBI, chairpersons of RRBs and their sponsor banks, and senior officers from the participating states.
Focus Areas and Directives
1. Boosting Credit Flow
Sitharaman urged RRBs to increase their share in credit disbursement, particularly in agriculture and allied activities such as dairy, animal husbandry, and fisheries. She highlighted the untapped potential of foxnut (makhana) and directed the Uttar Bihar Gramin Bank to prioritize credit flow to fisheries and foxnut-related businesses to support regional economic growth.
2. Support for Government Schemes
The Finance Minister emphasized the need for RRBs to actively promote and disburse loans under flagship schemes like MUDRA and PM Vishwakarma. She also called for a concerted effort to saturate beneficiaries under financial inclusion programs, including:
- Pradhan Mantri Jan Dhan Yojana (PMJDY)
- Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)
- Pradhan Mantri Suraksha Bima Yojana (PMSBY)
- Atal Pension Yojana (APY)
3. Empowering Women and SHGs
Sitharaman stressed the importance of supporting women’s self-help groups (SHGs) to drive entrepreneurship in rural areas. She urged state governments to collaborate with NABARD and SIDBI to provide training, marketing linkages, and financial assistance to SHGs, enabling them to evolve into successful enterprises. The minister also emphasized the role of the “One District One Product” (ODOP) initiative in generating self-employment opportunities in the region.
Technology Upgrades and Digital Transformation
To improve service delivery and operational efficiency, Sitharaman emphasized the need for rapid technology upgrades in RRBs. She directed the banks to onboard customers to digital services such as:
- Internet Banking
- Mobile Banking
- UPI
She set a deadline of December 2024 for RRBs to complete this digital onboarding and urged sponsor banks to assist in promoting these services to enhance their usage among customers.
Performance Highlights and Financial Health
The Finance Minister acknowledged the financial progress of RRBs in the region. Key improvements include:
- Capital Adequacy Ratio (CRAR): Improved from 7.8% in FY22 to 9.4% in FY24.
- Reduction in Non-Performing Assets (NPAs): Gross NPAs reduced from 25% in FY22 to 15% in FY24.
- Profitability: RRBs in the Eastern region recorded a consolidated profit of ₹625 crore in FY24, a significant turnaround from a net loss of ₹690 crore in FY23.
State Government’s Role
Deputy Chief Minister Samrat Choudhary called on banks to expand their presence in rural areas by opening more branches and improving the credit-deposit (CD) ratio. He also stressed the need for increased support for small-scale industries and greater adoption of digital transactions in rural regions.
Looking Ahead: Challenges and Opportunities
Sitharaman outlined the challenges that RRBs must address to ensure sustainable growth:
- Maintaining Asset Quality: Focus on reducing NPAs and ensuring healthy financial performance.
- Expanding Digital Services: Achieving complete customer onboarding for digital banking services.
- Corporate Governance: Strengthening governance practices to address future challenges effectively.
She concluded by reiterating the government’s commitment to financial inclusion and rural development, urging RRBs and their sponsor banks to work collaboratively in achieving these goals.
Key Takeaways
The meeting underscored the importance of RRBs as critical enablers of rural growth, emphasizing digital transformation, enhanced credit flow, and inclusive financial practices as pathways to a more robust rural economy.