How Can RRBs Enhance Lending in Agriculture and MSME Schemes?
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Synopsis
The government is urging regional rural banks to boost their lending efforts in agriculture and MSMEs through the ‘One State-One RRB’ initiative, aiming for sustainable growth and greater outreach in rural areas.
Key Takeaways
- RRBs have expanded their reach to over 22,000 branches.
- The government emphasizes lending in agriculture and MSMEs.
- RRBs achieved a net profit of Rs 7,148 crore in FY 2024-25.
- GNPA levels have dropped to 5.3%, the lowest in a decade.
- Amalgamation efforts aim to improve efficiency and sustainability.
New Delhi, May 6 (NationPress) The government has called upon regional rural banks (RRBs) to strengthen their lending practices in agriculture and related sectors, MSMEs, and government-backed schemes through the rollout of the ‘One State-One RRB’ initiative.
M. Nagaraju, Secretary of the Department of Financial Services (DFS), assessed the performance of RRBs and the progress regarding the amalgamation strategy during a meeting in Mumbai.
The DFS Secretary emphasized the importance of maintaining focus on the amalgamation journey and ensuring long-term viability.
RRBs have expanded significantly, operating over 22,000 branches across 700 districts nationwide, with more than 92 percent of their branches located in rural or semi-urban regions.
They have achieved a consolidated net profit of Rs 7,148 crore in the financial year 2024-25.
The gross non-performing assets (GNPA) have dropped to a decade-low of 5.3 percent.
Nagaraju encouraged sponsor banks to assist RRBs in their amalgamation efforts and ensure a level playing field for sustainable progress.
“Sponsor banks must support technology advancements within RRBs and adhere to the integration completion deadline of 30-09-2025,” he stated.
He also recommended that sponsor banks and RRBs tackle human resource challenges emerging from this process.
The DFS Secretary called on both parties to acknowledge the obstacles ahead. Sponsor banks, in collaboration with RRBs, are expected to formulate a roadmap for the next five years.
Officials from NABARD, DFS, sponsor banks, SIDBI, Reserve Bank of India, and Chairpersons of all RRBs were present at the meeting.
Last month, the DFS announced the amalgamation of 26 Regional Rural Banks on the principles of 'One State One RRB' as part of the fourth phase aimed at enhancing efficiency.
Currently, 43 RRBs operate across 26 states and 2 UTs. Following the amalgamation, there will be 28 RRBs remaining in the same regions, maintaining over 22,000 branches in 700 districts, predominantly in rural areas where approximately 92 percent of branches are situated.
RRBs are vital for fostering rural economic growth by offering financial services, especially credit and other support, to small and marginal farmers, agricultural workers, artisans, and small business owners in underserved rural locations.
Point of View
The initiatives undertaken by the government and the DFS signify a proactive approach to enhance the rural banking landscape. By encouraging RRBs to focus on agriculture and MSMEs, we are witnessing a concerted effort to drive economic growth and sustainability in rural areas, which is essential for the overall development of the country.
NationPress
08/06/2025
Frequently Asked Questions
What is the 'One State-One RRB' initiative?
The 'One State-One RRB' initiative aims to streamline and enhance the efficiency of regional rural banks by amalgamating them based on state lines, thereby improving their operational capabilities.
How many branches do RRBs currently operate?
RRBs currently operate over 22,000 branches across 700 districts, predominantly in rural and semi-urban areas.
What is the significance of the recent profit figures for RRBs?
The reported consolidated net profit of Rs 7,148 crore indicates the financial health and growing stability of RRBs, which is crucial for their continued support of rural economies.
What role do sponsor banks play in the RRB amalgamation process?
Sponsor banks are expected to guide RRBs through the amalgamation process, assist with technology upgrades, and ensure that RRBs have the resources necessary for long-term sustainability.
Why are RRBs important for rural development?
RRBs are crucial for rural development as they provide financial services, including credit, to small farmers and entrepreneurs, helping to stimulate economic growth in underserved areas.
