The Central government is planning to infuse capital in certain regional rural banks (RRBs) during 2023-24. The decision will be based on the performance of the banks and their adoption of digitisation.
Union Finance Minister Nirmala Sitharaman will hold a review meeting with chairpersons and senior officials of RRBs from the Northern region in New Delhi on Wednesday.
The meeting will discuss the financial performance of RRBs, such as their credit-deposit ratio, gross non-performing assets (gross NPAs), and provision coverage ratio (PCR).
The government’s decision to infuse capital in RRBs will depend on a number of factors, including their NPA reduction, credit expansion, business diversification, and improvement in corporate governance.
In FY23, RRBs received a capital infusion of Rs 10,890 crore. The Centre’s share in this was 50%, or Rs 5,445 crore.
The discussions on Wednesday will also focus on the performance of RRBs under the Centre’s flagship schemes, such as Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, PM SVANidhi, Atal Pension Yojana, PM Jan Dhan Yojana, PM Mudra Yojana, kisan credit card (KCC), and KCC for animal husbandry and fisheries.
The Centre has a 50% stake in RRBs, while sponsor banks and state governments own 35% and 15%, respectively.
The Department of Financial Services is working with RRBs to onboard them on the account aggregator framework. This will allow lending to the allied agriculture sector, such as fisheries and animal husbandry, as well as granting loans to street vendors under the PM SVANidhi scheme.
RRBs play a major role in ensuring timely and hassle-free flow of credit to farmers. The Centre has set an agriculture credit target of Rs 20 trillion for 2023-24, against Rs 21.7 trillion (provisional) disbursed in FY23. RRBs also play an active role in issuing KCCs to farmers.
The managing directors and chief executive officers of Punjab National Bank, Bank of Baroda, Bank of India, and National Bank for Agriculture and Rural Development (NABARD) are expected to take part in the discussions on Wednesday.
Senior officials from Uttar Pradesh, Jammu & Kashmir, Himachal Pradesh, Punjab, Haryana, and Uttarakhand may also attend the meeting.