Structural consolidation of RRBs completed
The Government is committed to increase credit flow to rural masses and all necessary steps will be taken to strengthen Regional Rural Banks (RRBs) assured the Finance Minister Shri P. Chidambaram while addressing the members of Parliamentary Consultative Committee attached to his Ministry in a meeting held on 25th April 2007.
The Finance Minister informed the members that the process for structural consolidation of RRBs by amalgamating RRBs, sponsored by the same bank within a State, started two years back, has been completed in March 2007 (target was June 2007) with number of RRBs reduced to 96 from 196. As a result of amalgamation the number of RRBs making profits is increasing and they are in a position to provide better customer service with better infrastructure and pooling of experienced work force.
The Minister informed the members that he has given directions for the appointment of General Managers to oversee the work of RRBs. Lok Adalats are being constituted which will help to settle a large number of NPAs. Shri Chidambaram told the members that the Government has adopted an aggressive Branch Expansion Policy and expects to cover all 80 uncovered districts within the current fiscal. The Government has also decided to extend Securitisation and Reconstruction of Financial Assets and Enforcement of
Securitisation of Interest (SARFAESI) Act to loans advanced by RRBs and the notification in this regard will be issued shortly, informed the Minister.
Speaking on the occasion, the Minister stated that the RRBs are playing an important role in developing the rural economy. RRBs have issued 69 lakh Kisan Credit Cards (KCCs) which is 11% of total KCCs and have been advised by the government to increase the number of KCCs, he said. The RRBs have formed 7.4 lakh SHGs till 2005-06 making the access easier to the farmers. Addressing the concern expressed by the members, the Finance Minister told that the RRBs have been directed to lend more money to non-farming community also within the rural population.
Deposits of RRBs increased by Rs. 9186 crore from Rs. 62,143 crore as on 31st March, 2005 to Rs. 71329 crore as on 31st March 2006. The percentage growth of deposits increased from 12.48% in 2003-04 to 14.78% during the year, which is the highest in the last three years. Borrowing of RRBs increased by Rs. 1779 crore from Rs. 5524 crore as on 31.03.2005 to Rs. 7302.59 crore as on 31.03.2006. The loan outstanding as on 31st March, 2006, increased by Rs. 6842 crore and reached to Rs. 39713 crore from Rs. 32870 crore as on 2004-05 registering a growth rate of 21%.
The investment of RRBs increased from Rs. 36762 crore as on 31st March, 2005 to Rs. 41182 crore as on 31st March 2006, registering a growth rate of 12.03%.
The credit deposit ratio of RRBs has increased over the years from 46.34% as on 31.03.2004 to 52.89% as on 31.3.2005 and further increased to 55.68% as on 31.03.2006.
111 RRBs (out of 133 RRBs) have earned profit to the extent of Rs. 808 crore as on 31st March, 2006 and the remaining 22 RRBs incurred loss to the extent of Rs. 191 crore. The total profit of RRBs has declined from Rs. 903 crore to Rs. 808 crore during the period under review and profit of all RRBs as a system (133 RRBs) posted net profit amount of Rs. 617 crore in 2005-06 as against Rs. 748 crore in 2004-05. Such decline in profit is mainly on account of payment of arrears due to implementation of revised salary to the employees and also due to low margin.
Total amount of accumulated losses posted by the RRBs has gone down from Rs. 2715 crore as on 31st March, 2005 to Rs. 2637 crore as on 31st March, 2006, thus the accumulated loss has come down by Rs. 78 crore during the year. The number of RRBs having accumulated losses has also gone down from 83 out of 196 RRBs in 2004-05 to 58 of the 133 RRBs in 2005-06.
There has been improvement in the recovery percentage over the years from 73.49% as on 30th June, 2003 to 79.85% as on 30th June, 2005.
Due to good NPA management in the RRBs, there has been progressive decline in the level of Gross NPA from 12.63% in 2003-04 to 7.28% in 2005-06. The aggregated amount of gross NPA stood at Rs. 2890 crore as on 31st March, 2006 as against Rs. 2804.35 crore as on 31st, March, 2005, which has marginally increased. On account of substantial amount earmarked as provision before profit, the net NPA % has declined from 8.55% in 2003-04 to 3.99% in 2005-06.
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