Bengal rural banks may be recapitalised

The Union Finance Ministry is mulling the idea recapitalisation of the regional rural banks (RRBs) in the state, provided the state government is willing to infuse Rs 50 crore, analogous to its share holding.

"The FM has said, that any state, willing to infuse capital to the extent of its share holding in RRBs to make the net worth positive, would be taken up for recap in the first instance," said Usha Thorat, deputy governor, Reserve Bank of India.

Based on the current balanced sheet, the three RRBs of the state would require Rs 330 crore for the recap, the share of state government at 15 percent, amounts to about Rs 50 crore.

According to Thorat, corresponding to the support of the state government, the sponsor banks and Union Government would put in their share, so that the RRBs could be recapitulated and subsequently grow their balance sheet.

"The RRBs are powerful institutions for reaching the small borrowers in the rural areas and thus they need to be supported by all the share holders," she added.

Presently, in the post merger scenario, there are three RRBs in the state, Uttar Banga Grameen Bank (sponsored by Central Bank of India), Bangia Grameen Bikash Bank, (sponsored by United Bank of India) and Paschim Banga Grameen Bank, sponsored by (UCO Bank).

As per the stake holdings in the RRBs, the Government of India, the state government, and the sponsored banks holds 50 percent, 15 percent, 35 percent respectively.

"RRBs can play vital role in the process of Financial Inclusion (FI) as they could carter the need of the small borrowers, it is because they have nearly 2 million loan accounts in the priority sector as compared to the 2.5 million accounts of commercial banks and 1.2 million accounts in the service sector as compared to 1 million accounts of the commercial banks," Thorat said.

While talking to the media in the sidelines of the 100th State Level Banking Committee (SLBC) meeting, Thorat also commented on the need for the "financial literacy" to enable the process of FI.

She said that RBI is prepared to support financial literacy project with material and training, provided the state government and the banks are prepared to provide the dissemination mechanism through branches, panchayats and schools.

"A sub committee of SLBC may be constituted to deliberate on the matter and come out with a concrete plan for promoting the financial literacy in West Bengal," she commented.

Regarding the SME sector, Thorat said there is a need to conduct a study for evolving a suitable product for the sector.

"Perhaps the institutions like IIM Kolkata and the three banks of this region could conduct the study, as this sector has high potential," she said.

She also called for setting up of a credit bureau or credit information company, which could help the SME sector immensely in accessing credit with better pricing.