'Loans to rural populace did not hit RRBs'

General manager of Syndicate Bank, Manipal, B Pramod on Monday said that the 10 regional rural banks (RRBs) sponsored by the Syndicate Bank had shown good growth and profitability. This was in spite of the bank lending to the rural population and weaker sections.

Speaking to reporters at the Malaprabha Grameena Bank in Dharwad he said the RRBs accounted for 15 per cent of the loans disbursed and 24 per cent of the profits earned by the 196 RRBs in the country. Malaprabha Grameena Bank (Karnataka), Gurgaon Grameen Bank (Haryana) and Padma Grameen Bank (UP) "" all sponsored by Syndicate Bank held the top three positions in profit earning. The total profit earned by the 10 RRBs stood at Rs 225 crore during 2003-2004, he added.

The Syndicate Bank exceeded its target in financing agriculture sector in the first half of the year, he said, adding that the bank had advanced Rs 861 crore to agriculture from April to September this year against a target of Rs 860 crore.

Pramod said that the advances to the priority sector and weaker sections during the first half of the year stood at Rs 2,200 crore. The cumulative outstanding loan for the sector was Rs 8,800 crore till September-end, he added.

In Karnataka the Syndicate bank had disbursed Rs 915 crore to the agriculture sector over the last three years while the advances to the priority sector was Rs 2,263 crore. He said that the Syndicate Bank had always catered to the needs of the rural populace and farming community.

Pramod asserted that all the 10 regional rural banks sponsored by Syndicate Bank were doing well. This has disproved that lending to poor and rural sector causes losses, he added.

The Syndicate Bank-sponsored RRBs had registered business of Rs 7 crore per branch while the national average was Rs 5. 7 crore per branch.

He said that the government and RBI were seriously considering the merger of RRBs to reduce their numbers and establishment costs.

Replying to a question as to why the RRBs, which had grown in size and strength, should not be freed from sponsor banks, he said there was no provision in the RRB Act for freeing the RRBs. It was a national policy and the time was not ripe to do so.

Stating that RRBs had a bright future, Pramod said the focus was shifting to the rural economy as it remained neglected since 1990. Disparity between the urban and rural incomes was glaring.

As such the RRBs had a major role to play in developing the rural economy. To another question, he replied that the RRBs had not been affected by globalisation as they faced no competition in villages.

The Syndicate Bank will introduce a new plan 'Solar Jyothi' for solar lighting in villages. The scheme will be launched in December and it provides for a loan upto Rs 25,000 at 10 per cent interest without collateral.

The bank will adopt certain villages as solar villages and provide solar lighting to all houses in the village. For those taking the loans under the scheme the rate of interest will be 5 per cent with a maximum repayment period of seven years.

Malaprabha Grameena Bank chairman B S Surendra was present. Pramod inaugurated the training centre for Syndicate Bank sponsored RRBs' staff at Malaprabha Grameena Bank head office premises.