Strengthening Rural Banking in Eastern India
Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, recently chaired a significant meeting in Patna to assess the performance of eight Regional Rural Banks (RRBs) in the Eastern Region of India. This meeting focused on the states of Bihar, Jharkhand, Odisha, and West Bengal. The gathering included key figures such as Shri Samrat Choudhary, Deputy Chief Minister of Bihar, and representatives from various financial institutions. The discussions centered on enhancing the operational efficiency of RRBs, improving digital services, and boosting credit disbursement to support rural economies.
Focus on Business Performance and Growth
The review meeting highlighted the importance of RRBs in fostering economic growth in rural areas. Smt. Sitharaman emphasized the need for these banks to improve their business performance. She urged RRBs to upgrade their digital technology services to better serve their customers. The Union Finance Minister pointed out that RRBs play a crucial role in supporting agriculture and small industries. Therefore, she called for increased credit disbursement under various Government of India flagship schemes, such as MUDRA and PM Vishwakarma.
The meeting also addressed the need for RRBs to focus on agriculture-related activities. Smt. Sitharaman directed the Uttar Bihar Gramin Bank to enhance credit flow to fisheries and foxnut (makhana) sectors. These sectors have significant potential for growth and can contribute to the region’s economy. By prioritizing these areas, RRBs can help improve the livelihoods of many rural families.
Emphasizing Technology Upgradation
Smt. Sitharaman stressed the importance of accelerating technology upgrades within RRBs. She noted that improved technology can enhance efficiency and service delivery. The financial performance of RRBs in the Eastern Region has shown positive trends. The Consolidated Capital to Risk-Weighted Assets Ratio (CRAR) improved from 7.8% in FY 2022 to 9.4% in FY 2024. Additionally, the Gross Non-Performing Assets (GNPA) ratio decreased from 25% to 15% during the same period.
These improvements indicate that RRBs are becoming more financially stable. The consolidated profit of RRBs reached Rs 625 crore in FY 2024, a significant turnaround from a net loss of Rs 690 crore in FY 2023. This financial recovery is crucial for the sustainability of RRBs and their ability to support rural economies.
Promoting Financial Inclusion and Digital Services
The Union Finance Minister highlighted the vast potential for financial inclusion in the Eastern Region. She urged sponsor banks to work closely with RRBs to saturate beneficiaries under various Government of India financial inclusion schemes. These include the Pradhan Mantri Jan Dhan Yojana (PMJDY) and the Atal Pension Yojana (APY).
Smt. Sitharaman also emphasized the need for RRBs to provide digital services such as Internet Banking, Mobile Banking, and UPI. She directed these banks to complete the onboarding of these services by the end of December 2024. Promoting these digital services among customers will increase their usage and improve overall banking efficiency.
Furthermore, the Union Finance Minister pointed out the potential of the One District One Product (ODOP) program to enhance self-employment opportunities in the region. She called on state governments to support banks in increasing credit flow to women Self-Help Groups (SHGs) and to collaborate with NABARD and SIDBI to help these groups evolve into enterprises.
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