Modi Government Allocates Rs 6212.03 Crore to Boost Regional Rural Banks

The Modi government has allocated a significant sum of Rs 6212.03 crore to Regional Rural Banks (RRBs) as part of a recapitalization scheme aimed at bolstering rural banking and financial services across India. This allocation, as of March 6, underscores the government’s commitment to strengthening the backbone of rural economies and empowering grassroots communities.

RRBs, established by the Indian government in 1975, serve as crucial institutions providing basic banking services to rural areas, particularly benefiting small and marginal farmers, agricultural laborers, artisans, and small entrepreneurs. Over the years, RRBs have played a pivotal role in fostering financial inclusion and economic development in rural regions.

The performance of RRBs has shown remarkable improvement, with a consolidated Capital to Risk-weighted Assets Ratio (CRAR) reaching an all-time high of 13.83 per cent as of December 31, 2023. This demonstrates the resilience and sound financial management of these banks, ensuring stability and security in their operations.

Under the recapitalization scheme, RRBs receive essential support to maintain the minimum prescribed capital-to-risk (Weighted) Assets ratio of nine per cent, ensuring their continued viability and ability to serve the needs of rural communities effectively.

Notably, Indian RRBs achieved their highest-ever consolidated net profit of Rs 4,974 crores in the fiscal year 2022-23, further boosting confidence in their financial health and performance. As of the third quarter of the fiscal year 2023-24, RRBs have already recorded a net profit of Rs 5,236 crore, showcasing sustained growth and profitability.

The credit expansion facilitated by RRBs has led to a notable increase in the consolidated credit-deposit ratio, reaching 72.13 per cent as of September 30, 2023, marking a significant milestone in the last 15 years. This highlights the crucial role RRBs play in channeling credit to rural sectors and promoting economic activities in these areas.

The Modi government’s strategic support, coupled with RRBs’ operational efficiency and strong financial performance, underscores the critical importance of these institutions in driving inclusive growth, supporting agriculture, and fostering entrepreneurship in rural India. With 43 RRBs sponsored by 12 scheduled commercial banks, the reach and impact of these banks continue to expand, making them vital pillars of India’s rural financial landscape.