Finance Minister Nirmala Sitharaman Reviews Performance of Nine Regional Rural Banks

Union Finance Minister Nirmala Sitharaman conducted a review meeting on Thursday with nine Regional Rural Banks (RRBs) from Gujarat, Maharashtra, Madhya Pradesh, Chhattisgarh, and Rajasthan to assess their performance. She instructed the RRB officials to actively participate in raising awareness about government schemes, particularly in aspirational districts.

In light of low withdrawals under the Mudra scheme in the Bundelkhand region during a specific period, the Finance Minister directed the State-Level Bankers’ Committee (SLBC) to hold special meetings with state government officials, sponsor banks, and RRBs. The goal is to improve the performance of the Mudra scheme and other financial inclusion initiatives in Bundelkhand and aspirational districts. The meeting also discussed the business performance of rural banks, the enhancement of services through digital technology, promoting business among MSME groups, and strengthening financial inclusion in rural areas.

Minister Sitharaman highlighted the natural potential of the PM Surya Ghar Yojana in Gujarat and Rajasthan and urged RRBs to raise awareness about the scheme among the general public. She also emphasized the importance of providing loans under this scheme. The meeting also discussed the “One District One Product” (ODOP) program to extend credit access, and RRBs were instructed to identify potential trades under the PM Vishwakarma Yojana within their operational areas and provide loans accordingly. Additionally, the RRBs were directed to increase their participation in agricultural lending at the grassroots level and to meet the declared objectives of lending in priority sectors.

The Finance Minister expressed satisfaction with the improvements in technology upgrades among these nine RRBs in the Western Central region since regular reviews began in 2022. Notably, the consolidated CRAR (Capital to Risk-weighted Assets Ratio) has improved from 7.8% in FY 2021 to 13.7% in FY 2024, and profitability has also improved from a deficit. The Gross Non-Performing Assets (GNPA) ratio remains relatively low at 3.9%. She urged the RRBs to maintain this momentum in the future. The Finance Minister also directed the RRBs to leverage their healthy Current Account Savings Account (CASA) ratio to distribute more loans and requested the Reserve Bank to intervene in resolving the pending dues of the RRBs.

During the review meeting, the Finance Minister emphasized that RRBs should become more customer-friendly and leverage their local connections to further improve their performance. Sponsor banks play a crucial role in providing technical assistance, sharing best practices, and ensuring that RRBs have access to the resources needed for success. The Minister highlighted the importance of active outreach by RRBs within MSME groups to ensure credit availability for small and micro-enterprises. She mentioned that all RRBs have customized MSME products aligned with cluster activities, but they need to regularly review their credit portfolios in that segment.

The Finance Minister also stressed the need for sponsor banks and RRBs to identify the challenges they face. Maintaining asset quality, expanding digital services, and ensuring robust corporate governance are areas that require continuous attention. The meeting was attended by the Chairpersons of RRBs, CEOs of sponsor banks, the Secretary of the Department of Financial Services (DFS), additional secretaries, senior DFS officials, and representatives from the Reserve Bank, SIDBI, NABARD, and senior officials from the five states.