FM Will Soon Evaluate Regional Rural Banks’ Performance

According to reports, Nirmala Sitharaman, the minister of finance, would likely meet with the leaders of the Regional Rural Banks (RRBs) shortly to assess their performance.

RRBs are crucial to the financial inclusion of rural communities and to meeting their credit demands.

The finance minister would assess the status of RRBs’ issuance of Kisan Credit Cards (KCC) to the agricultural and related sectors, according to sources.

 

A special KCC saturation push was started under the Atma Nirbhar Bharat Abhiyan to cover 2.5 crore farmers under KCC with a credit boost of Rs 2 lakh crore in an effort to give the advantages of KCC loans to as many farmers as possible.

 

According to the reports, she is also anticipated to examine the capital condition of a few of the weak RRBs.

 

Other topics that can be covered at the conference include the need for RRBs to upgrade their technology, methods for reducing NPAs, IT efforts, increasing financial inclusion, boosting credit delivery to rural regions, and help provided by sponsor banks to the RRBs.

 

Under the RRB Act of 1976, these banks were established with the purpose of giving small farmers, agricultural laborers, and craftsmen in rural regions access to credit and other amenities.

 

Currently, the sponsor banks and state governments own 35% and 15% of the respective RRBs, with the remaining 50% owned by the Centre.

 

Sitharaman met with the CEOs of public sector banks earlier in the day.

 

She evaluated financial results and assessed the banks’ progress toward achieving the goals set forth in a number of government programs, such as Stand-Up India, the Pradhan Mantri Mudra Yojana (PMMY), the Atal Pension Yojana, and the emergency credit line guarantee scheme (ECLGS) to aid businesses impacted by Covid-19.

 

According to reports, the finance minister will assess the banks’ business development plans for the next fiscal year, as well as loan growth, asset quality, capital raising, and non-performing assets (NPAs) of Rs 100 crore.

 

The gross non-performing assets (GNPAs) ratio for banks decreased further to a ten-year low of 3.9% as of March 2023, according to the most recent Financial Stability Report (FSR). The GNPAs are anticipated to further improve to 3.6% in the base case, according to the central bank.

 

The finance minister said last week that banks must “build on laurels” by adhering to the finest corporate governance guidelines.

 

“Banks shouldn’t relax and enjoy their achievements. Best corporate governance procedures, adherence to legal requirements, cautious liquidity management, and continued emphasis on strong asset-liability and risk management were all advised, she had stated.

 

She emphasized that the “twin balance sheet problem” had given way to the “twin balance sheet advantage” in the Indian economy.