 "Centre likely to infuse capital in certain regional rural banks in FY24")
The Centre is likely to infuse capital in certain regional rural banks (RRBs) during 2023-24, depending on their performance and adoption of digitisation.
Union Finance Minister Nirmala Sitharaman will hold a review meeting with chairpersons and senior officials of RRBs from the Northern region in New Delhi on Wednesday.
“The deliberations will revolve around the financial performance of RRBs such as credit-deposit ratio, gross non-performing assets (gross NPAs) and provision coverage ratio (PCR), among others,” a senior finance ministry official said.
RRBs capitalisation will depend on broad parameters such as NPA reduction, credit expansion, business diversification and improvement in corporate governance, a senior finance ministry official told Business Standard.
In FY23, RRBs saw funds infusion of Rs 10,890 crore. The share of the Centre in this was 50 per cent at Rs 5,445 crore.
For instance, the nine RRBs under Punjab National Bank (PNB) saw their capital adequacy ratio (overall) decline by 111 basis points (bps) year-on-year (Y-o-Y) to 11.73 per cent at the end of financial year 2022-23 (FY23).
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Wednesday’s discussions will also focus on the performance of RRBs under the Centre’s flagship schemes such as Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, PM SVANidhi, Atal Pension Yojana, PM Jan Dhan Yojana, PM Mudra Yojana, kisan credit card (KCC) and KCC for animal husbandry and fisheries, besides others.
The Centre has 50 per cent stake in RRBs while sponsor banks and state governments own 35 per cent and 15 per cent, respectively.
The department of financial services is also working with RRBs to onboard them on the account aggregator framework. This will allow lending to the allied agriculture sector like fisheries and animal husbandry, besides granting loans to street vendors under PM SVANidhi scheme.
RRBs play a major role in ensuring timely and hassle-free flow of credit to farmers. The Centre has set an agriculture credit target for 2023-24 at Rs 20 trillion against Rs 21.7 trillion (provisional) disbursed in FY23. RRBs also play an active role in issuing KCCs to farmers.
The managing directors and chief executive officers of Punjab National Bank, Bank of Baroda, Bank of India, and National Bank for Agriculture and Rural Development (NABARD) are expected to take part in the discussions.
Senior officials from Uttar Pradesh, Jammu & Kashmir, Himachal Pradesh, Punjab, Haryana and Uttarakhand may also attend the meeting.