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Application of Capital Adequacy Norms to RRBs- December 2007

At present, Regional Rural Banks (RRBs) are outside the Capital to Risk weighted Assets Ratio (CRAR) framework. In a move to impose greater financial discipline, the Reserve Bank has asked all regional rural banks to disclose the level of CRAR as on March 31, 2008 in their Balance Sheets.

Accordingly, all Regional Rural Banks are advised to disclose their CRAR as on March 31, 2008 and thereafter every year as 'Notes on Accounts' to their Balance Sheets. The roadmap for achieving the desired level of CRAR norms would be communicated in due course.

Under the proposed CRAR framework, the Balance Sheet assets and non-funded / off-balance sheet items will be assigned weights and banks have to compute the ratio of their capital funds to the aggregate of risk weighted assets and other off-balance sheet exposures.

As of March 2007, total number of RRBs was 96 with the amalgamation of 145 such banks into 45 new RRBs. The total number of RRBs declined from 196 at end-March 2005 to 133 at end-March 2006.

Structural consolidation of RRBs completed click here
Significant improvement in RRB's Performance click here
RRBs allowed to participate in consortium lending click here
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