Jammu and Kashmir:
Regional Rural Banks (RRBs) were set up in 1975 to meet the institutional credit demand in the rural areas, especially among the economically and socially marginalized sections of the society. Today we have 57 RRBs, covering 635 districts with a formidable network of 18,299 branches and 9,701 ultra-small branches (USBs) in the country.
A meeting to review the performance of RRBs on Key Performance Indicators and other thrust areas, including HR related issues was convened by NABARD at Head Office in Mumbai on February 25, 2014. The meeting was inaugurated by Shri Rajiv Takru, IAS, Secretary, DFS, Ministry of Finance, and Government of India. Dr Harsh Kumar Bhanwala, Chairman, NABARD, presided over the meeting. All the 57 Chairmen of RRBs and senior executives of Reserve Bank of India and sponsor banks participated in the meeting.
Addressing the gathering, Dr Bhanwala, Chairman, NABARD, said, “As a supervisory authority, NABARD has recommended several measures such as need-based recapitalisation, consolidation of RRBs and migration to the Core Banking Solutions (CBS) to strengthen RRBs.”
Elucidating it further, he said, “I am really happy at the way the RRBs have turned around. The loans issued by them crossed Rs one lakh crore mark for the first time during 2012-13, aggregating to Rs 102,382.24 crore as against Rs 82,538.29 crore in the previous year. The priority sector lending for the last three years has been more than 80% as against the targeted level of 60%. The RRBs have shown improved performance in profitability, with 63 of 64 RRBs earning a profit of Rs 2,275 crore during 2012-13. While he appreciated that the CASA deposits are very significant (at 57% of their deposits), he cautioned RRBs to be vigilant with regard to NPAs.
Speaking on the occasion, Shri Takru, IAS, Secretary, MofF, GoI urged RRBs to increase revenue and reduce NPAs, professionalise their services and impart carefully designed and structured training programmes to their staff so that they are familiar, well-versed and can deliver to their best. “RRBs can take whatever help is required from RBI, NABARD, and also from the Government in cases where its intervention is required for playing a socially relevant role in their area of operation.” He categorically said that RRBs should sell their “priority sector” portfolios to the highest bidder and not necessarily to their own sponsor bank. He said that RRBs are really relevant and are more glamorous than their bigger cousins as they reach out to the last mile. He coaxed them to completely move on to the technology platform and provide all services like the public sector commercial banks.
Dr Bhanwala listed out several areas RRBs must endeavour like supporting long term loans to allied activities which will improve the capital formation in agriculture, financial inclusion through Rupay-Kisan Credit Cards, promotion of Self-Help Groups & Joint Liability Groups to make RRBs financially stronger. He also suggested that the RRBs adopt the best practices of corporate governance. “The main challenge before RRBs, however, remains to redesign products, systems and procedures in such a way that they can meet all the financial needs of existing customers and cover the unbanked population,” he said.