Boost To Regional Rural Banks: Government Infuses Rs 670 Cr To Meet Regulatory Capital

Out of the 43 RRBs, about one-third from north-eastern and eastern regions are experiencing losses and they needed funds to meet regulatory capital requirement of 9%.

India   |   3 Nov 2020 4:35 AM GMT
Writer : Palak Agrawal | Editor : Prateek Gautam | Creatives : Rajath
Boost To Regional Rural Banks: Government Infuses Rs 670 Cr To Meet Regulatory Capital

Image Credits: Pixabay

The central government has infused ₹670 crore to the Regional Rural Banks (RRBs) on the backdrop of such banks assuming significance in facilitating agriculture finance during the coronavirus crisis.

The Regional Rural Banks (RRBs) were established to cater to the commercial needs of rural areas. It had been set up to provide a number of services for the development of the rural economy including industrial, credit to small farmers, agricultural labourers and artisans.

Additionally, RRBs also provide lending to micro/small enterprises and small entrepreneurs in rural areas. With the recapitalisation support to augment CRAR, RRBs will be able to continue their lending to such borrowers thereby sustaining rural livelihood.

According to a report by Bloomberg, out of the 43 RRBs, about one-third from north-eastern and eastern regions are experiencing losses and they needed funds to meet regulatory capital requirement of 9%.

The central government, respective state governments, and the sponsor banks provide capital to these banks in the ratio 50:15:35 to enable them to meet the regulatory requirement of capital to risk-weighted assets ratio.

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

As per the data published by National Bank for Agriculture and Rural Development, RRBs as an entity reported a net loss of ₹2,206 crore in the fiscal year ended March 31, 2020, as against ₹652-crore net loss in FY19.

Gross non-performing assets as a percentage of gross loans outstanding of RRBs marginally declined to 10% per cent as on March 31, 2019, the data revealed.

Also Read: Assam: Story Of 'Forest Man Of India' Now Part Of US School Curriculum

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Contributors

Palak Agrawal

Palak Agrawal

Digital Journalist

Palak a journalism graduate believes in simplifying the complicated and writing about the extraordinary lives of ordinary people. She calls herself a " hodophile" or in layman words- a person who loves to travel.

Prateek Gautam

Prateek Gautam

Digital Editor

A free soul who believes that journalism, apart from politics, should stand for social cause and the environment.

Rajath

Rajath

Creative Producer

A free spirit who find meaning in life with the virtue of creativity and doing job par its excellence, animal lover and traveller by heart.

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