Finance Minister Reviews RRBs’ Performance, Urges Focus on Digital Growth
Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, chaired a comprehensive review meeting of Regional Rural Banks (RRBs) in New Delhi today. The meeting was attended by top officials from the Department of Financial Services (DFS), Reserve Bank of India (RBI), Small Industries Development Bank of India (SIDBI), National Bank for Agriculture and Rural Development (NABARD), as well as the chairpersons of RRBs and CEOs of their sponsor banks.
The agenda of the meeting focused on evaluating the business performance of all 43 RRBs, upgrading digital technology services, and strategizing for business growth, particularly in the Micro, Small, and Medium Enterprises (MSME) clusters.
Recognizing the critical role of RRBs in bolstering the rural economy, Smt. Sitharaman urged these banks, along with their sponsor banks, to prioritize the clear identification of beneficiaries when sanctioning loans under various government schemes, such as PM Vishwakarma and PM Surya Ghar Muft Bijli Yojana. She also directed RRBs to enhance their participation in ground-level agriculture credit disbursement, further strengthening their support to the rural sector.
The Finance Minister praised the RRBs for their significant improvement in financial performance and technology upgrades since the regular reviews began in 2022. The consolidated net profit of RRBs reached an all-time high of ₹7,571 crore in FY 2023-24, with the Gross Non-Performing Assets (GNPA) ratio dropping to 6.1%, the lowest in the last decade.
Smt. Sitharaman emphasized the importance of RRBs having their own updated technology infrastructure to remain competitive. She noted that digital banking services, including mobile banking, would be particularly beneficial in regions with challenging physical connectivity, such as the North Eastern states and hilly regions. Sponsor banks were encouraged to provide the necessary technical assistance and share best practices to help RRBs succeed in this digital transition.
Moreover, the Finance Minister highlighted the need for RRB branches located in MSME clusters to actively reach out and ensure credit availability to small and micro enterprises. Sectors like textiles, handicrafts, wooden furniture, clay pots, jute handicrafts, leather, food processing, dairy farming, and packing materials were identified as having significant potential for increasing the loan portfolio of RRBs.
To support this growth, Smt. Sitharaman urged RRBs to develop MSME-specific products aligned with their cluster activities and to leverage personal and local connections to boost banking penetration. SIDBI was directed to assist RRBs in exploring co-lending and risk-sharing models, as well as in extending refinance support for their MSME portfolios.
Concluding the meeting, Smt. Sitharaman called on RRBs and their sponsor banks to remain vigilant in maintaining asset quality, expanding digital services, and ensuring strong corporate governance as they navigate the challenges ahead.
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