Performance Review of Regional Rural Banks (RRBs)

• 23 Aug 2024

Why in News?

Recently, the Union Minister for Finance and Corporate Affairs chaired a meeting to review performance of nine Regional Rural Banks (RRBs) in Udaipur.

Key Points

• RRBs of the states of Gujarat, Maharashtra, Madhya Pradesh, Chhattisgarh and Rajasthan were reviewed.
• The meeting focused on business performance, digital technology upgrades, MSME (Micro, Small and Medium Enterprises) cluster growth, and rural financial inclusion.
• The Union Minister directed:
  • the State Level Bankers’ Committee (SLBC) to hold meetings with State Government, Sponsor Banks and RRBs to improve performance of MUDRA scheme and other financial inclusion schemes in Bundelkhand and aspirational districts.
  • RRBs to generate awareness and provide credit under the PM Surya Ghar Muft Bijli Yojana scheme in Gujarat and Rajasthan.
  • RRBs to identify potential trades under PM Vishwakarma scheme and increase their share in ground level agriculture credit disbursement to achieve the stated objectives of Priority Sector Lending.

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, and 30 of the 43 RRBs reported net profits.

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).

PM Surya Ghar Muft Bijli Yojana

• The government introduced the Programme in 2014 to promote rooftop solar installation.
• The original target was 40 GW installed capacity (out of 100 GW by 2030) by 2022 but the goal was not met by 2022, the deadline was extended to 2026.
  • Rooftop solar panels are photovoltaic panels installed on the roof of a building and connected to the main power supply unit.
• Its objective is to promote grid-connected solar rooftop systems on residential buildings.
• Key Initiatives under Rooftop Solar:
  • SUPRABHA (Sustainable Partnership for RTS Acceleration in Bharat).
  • SRISTI (Sustainable Rooftop Implementation for Solar Transfiguration of India).