FM Sitharaman Reviewed Performance of Karnataka Grameena Bank

Union Finance and Corporate Affairs Minister Nirmala Sitharaman chaired a review meeting on Thursday in Ballari, Karnataka, to evaluate the performance of Karnataka Grameena Bank (KaGB). The meeting was attended by M. Nagaraju, Secretary of the Department of Financial Services (DFS); Shaji K. V., Chairman of NABARD; senior officials from the Ministry of Finance; and executives from Canara Bank, the sponsor bank.

Karnataka Grameena Bank (KGB) is a new regional rural bank, established on May 1, 2025, through the amalgamation of the former Karnataka Vikas Grameena Bank and Karnataka Grameena Bank. Headquartered in Ballari, it is sponsored by Canara Bank and is owned by the Central Government (50%), the State Government (15%), and Canara Bank (35%). It has 1750 branches, 200+ Networked ATMs and 8000+ Employees.

During the review, the Finance Minister examined key indicators such as credit growth, non-performing assets (NPAs), financial inclusion progress, and the implementation of government schemes. She urged Karnataka Grameena Bank to increase agricultural credit and focus more on new areas of the rural economy.

FM Sitharaman directed the bank and its sponsor Canara Bank to work closely with the state government departments to boost lending to MSMEs and allied agricultural sectors. She pointed out that GST rate rationalisation and rising rural demand offer new business opportunities for banks and encouraged them to expand lending in semi-urban and rural areas.

The Finance Minister also highlighted the importance of supporting Farmer Producer Organisations (FPOs) by providing working capital loans. She said, “Rural banks should upgrade their services to meet the needs of FPOs. This will help both banks and FPOs grow together and contribute to rural development.”

She further advised rural banks to take advantage of the growing shift of data centres and services from major cities to smaller towns, as this can improve their financial health. Sitharaman also asked the bank to improve asset quality, adopt modern technology, and enhance customer service to increase profitability and efficiency.

FM Sitharaman instructed Karnataka Grameena Bank to coordinate with panchayat and district-level committees to better screen applications under government schemes such as PM Vishwakarma and PM Formalisation of Micro Food Processing Enterprises (PMFME). She encouraged the bank to open more branches in underserved areas, especially in the Kalyan Karnataka region.

DFS Secretary M. Nagaraju praised the successful system integration after the bank’s amalgamation and stressed the need for a medium-term business plan to ensure long-term stability. He also noted the huge potential for growth in agro-processing and MSMEs and suggested that KaGB should partner with NABARD to promote value creation in agriculture and related industries.

Nagaraju appreciated the bank’s good performance under the Atal Pension Yojana and called for better results in other financial inclusion schemes such as PMJJBY, PMSBY, and PMJDY. He also emphasized the need for staff training and skill development to strengthen the bank’s operations after amalgamation.