Meeting to Review Regional Rural Banks (RRBs) Performance | 04 Dec 2024

Why in News? 

Recently, the Union Minister for Finance reviewed the performance of eight Regional Rural Banks (RRBs) from the Eastern Region, covering Bihar, Jharkhand, Odisha, and West Bengal, during a meeting held in Patna.

Key Points 

  • Focus Areas of the Meeting: 
    • Business performance, digital technology upgrades, and fostering growth in agriculture and micro-industry-related activities were the primary focus. 
    • The Union Finance Minister emphasized increasing credit disbursement under flagship schemes like MUDRA and PM Vishwakarma with sponsor banks' support. 
  • Directives for Agriculture and Allied Activities: 
    • RRBs were directed to boost ground-level agricultural credit, especially for allied activities such as dairy, animal husbandry, and fisheries. 
    • Uttar Bihar Gramin Bank was tasked to enhance credit for fisheries and foxnut (makhana) to realize their regional potential. 
  • Emphasis on Technology Upgradation: 
    • The Union Finance Minister stressed accelerating technology enhancements to improve RRB efficiency and service delivery. 
    • Financial parameters showed improvement, with Capital Adequacy Ratio rising from 7.8% (FY 2022) to 9.4% (FY 2024) and Gross Non-Performing Assets (GNPA) decreasing from 25% to 15% during the same period. 
    • RRBs in the Eastern Region recorded a profit of Rs 625 crore in FY 2024 compared to a net loss of Rs 690 crore in FY 2023. 
  • Financial Inclusion Initiatives: 
  • Digital Services and Deadlines: 
  • Promoting Self-Employment and SHGs: 

Regional Rural Banks (RRBs)

  • RRBs were established in 1975 under the provisions of the Ordinance promulgated on 26th September 1975 and Regional Rural Banks Act, 1976. 
  • These are financial institutions which ensure adequate credit for agriculture and other rural sectors. 
  • They combine the characteristics of a cooperative in terms of the familiarity of the rural problems and a commercial bank in terms of its professionalism and ability to mobilise financial resources. 
  • After the reforms in the 1990s, the government in 2005-06 initiated a consolidation program that resulted in the number of RRBs declining from 196 in 2005 to 43 in FY21.

Pradhan Mantri Mudra Yojana (PMMY) 

  • PMMY was launched by the Government of India in 2015. 
  • The PMMY provides collateral-free institutional loans up to Rs. 10 lakhs for small business enterprises. 
  • It is provided by Member Lending Institutions (MLIs) i.e. Scheduled Commercial Banks (SCBs), Regional Rural Banks (RRBs), Non-Banking Financial Companies (NBFCs) and Micro Finance Institutions (MFIs). 
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