Fin Min meets  bank CEOs to discuss performance and governance changes in RRBs

7 Jul 2022 , 03:58 PM

Later on Thursday (07-07-2022), Finance Minister Nirmala Sitharaman will meet with the heads of public sector lenders to address a number of topics and assess the status of different government programs pertaining to agricultural and associated industries. The conference is anticipated to evaluate governance improvements in Regional Rural Banks, according to sources (RRBs).

Public Sector Banks support RRBs, which are crucial for agricultural finance (PSBs). Currently, the Centre owns 50% of RRBs, while the relevant sponsor banks own 35% and the state governments own 15%, respectively.

According to reports, of the 43 RRBs, around a third, particularly those from the north-eastern and eastern areas, are losing money and require funding to achieve the minimum capital requirements of 9%. 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.

In 2015, the Act was revised to allow these banks to raise capital from sources outside the Center, States, and Sponsor Banks. Currently, the Centre owns 50% of RRBs, while the relevant sponsor banks own 35% and the state governments own 15%, respectively.

The Finance Ministry met with the heads of public sector banks for a whole day last month. In order to hasten the recovery of the economy, which is now facing challenges from the Russia-Ukraine war among other things, bankers were asked to provide loans for productive industries.

Additionally, banks were urged to concentrate on recovering defaulted loans and hasten the resolution of non-performing assets (NPAs). The conference on June 20 also reviewed the banks' goals for business expansion, asset quality, and lending growth.