RRBs should leverage lending in agriculture, MSME schemes: DFS Secretary

New Delhi, May 6 (IANS) The government has urged regional rural banks (RRBs) to leverage their lending in agriculture and allied activities, MSMEs and government-sponsored schemes, with the implementation of the ‘One State-One RRB’ initiative.

M. Nagaraju, Secretary, Department of Financial Services (DFS) reviewed performance of RRBs and progress on amalgamation plan in Mumbai.

The DFS Secretary urged the rural banks to continue to focus on their amalgamation process and long-term sustainability.

RRBs have grown in their reach to more than 22,000 branches, covering 700 districts of the country and more than 92 per cent of its branches are in rural/semi urban areas.

They have recorded consolidated net profit of Rs 7,148 crore in FY 2024-25.

Gross non-performing assets (GNPA) reached a new low of 5.3 per cent, lowest in a decade period.

Nagaraju also asked sponsor banks to guide RRBs in their amalgamation process and provide level-playing field for long-term sustainability.

“Sponsor banks should continue to facilitate technology upgradation in RRBs and to complete integration process adhering to the strict timelines of 30-09-2025,” he said.

He also suggested sponsor banks and RRBs to also address HR-related issues emerging in the process.

The DFS Secretary asked sponsor banks and RRBs to recognise the challenges that lie ahead. Sponsor banks, in consultation with RRBs, were asked to draft a roadmap for RRBs for next five years.

NABARD Chairman and officials of DFS, sponsor banks, SIDBI, Reserve Bank of India and Chairpersons of all RRBs were also present at the meeting.

Last month, the Department of Financial Services notified the amalgamation of 26 Regional Rural Banks (RRBs) on the principles of 'One State One RRB' as part of the fourth phase of the continuing exercise to improve efficiency.

At present, 43 RRBs are functioning in 26 states and 2 UTs. Post amalgamation, there will be 28 RRBs in 26 states and 2 UTs with more than 22,000 branches covering 700 districts. Their predominant area of operation is in rural areas, with approximately 92 per cent of branches in rural and semi-urban areas.

RRBs play a crucial role in promoting rural economic development by providing financial services, particularly credit and other facilities, to small and marginal farmers, agricultural labourers, artisans, and small entrepreneurs in underserved rural areas.

--IANS

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