Govt infuses ₹670-cr into regional rural banks

In a bid to strengthen capital base, the union government has provided ₹670 crore to Regional Rural Banks (RRBs) considering their importance in agriculture finance during these difficult times.

Of the 43 RRBs, about onethird especially from north-eastern and eastern regions are in losses and they needed fund to meet regulatory capital requirement of 9%, sources said. As per the current scheme for recapitalisation of RRBs, the capital support is provided to these banks by the Centre, concerned state governments and the sponsor banks in the ratio of 50:15:35, respectively to enable them to meet the regulatory requirement of capital to risk weighted assets ratio (CRAR) of 9%.

According to sources, matching funds were released by sponsor banks and many of the state governments.

With the infusion, sources said, CRAR of these weak RRBs rose to 9% level as per the regulatory norms prescribed by the Reserve Bank of India (RBI).

This round of infusion would take care of capital needs till March 31, 2021, sources added.

RRBs as a group reported net loss of ₹2,206 crore in the fiscal year ended March 31, 2020, as against ₹652-crore net loss in FY19, according to data published by the National Bank for Agriculture and Rural Development (Nabard).

Gross non-performing assets as a percentage of gross loans outstanding of RRBs marginally declined to 10.4% per cent as on March 31, 2020, from 10.8% as on March 31, 2019, the data showed.

Deposits and advances of RRBs increased by 10.2% and 9.5%, respectively during FY2019-20. Gross outstanding loans stood at ₹2.98 lakh crore as against ₹2.80 lakh crore in FY19. Priority sector loans constituted 90.6% or ₹2.70 lakh crore of the gross loans outstanding of RRBs as on March 31, 2020. Share of agriculture and MSME sectors in total loan outstanding stood at 70% and 12%, respectively.

NEARLY ONE-THIRD OF 43 RRBS ARE SHORT OF MEETING REGULATORY CAPITAL NORMS