Pranab to meet RRB heads to assess performance

Union finance minister Pranab Mukherjee will meet the heads of 82 Regional Rural Banks to assess the roadmap to financial inclusion and implementation of core banking solution on 23 July in Delhi. 

This meeting will review an “Action taken report” on the decisions taken in the last meeting of the RRBs with the minister in Delhi on 18 August 2009. 

The main agenda of the meeting will be financial inclusion and implementation of the Financial Inclusion Fund (FIF) and Financial Inclusion Technology Fund (FITF), Core Banking Solution (CBS) system, credit flow to agriculture, net non-performing assets, capital adequecy ratio and human resources development of the RRBs. 

It is to be noted, the working group on Information and Communication Technology through FIF and FITF had recently recommended for “technology upgrade” interest free loan with a moratorium of three years, with repayment not exceeding 5 per cent of the profit. 

However, the recommendation is yet to be implemented. 

“The RRBs are not in a position to use ICT based solution, and the time frame for financial inclusion and migration to CBS is almost same which gives rise to this conflict. Apart from CBS, a huge cost is involved for financial inclusion with ICT. If the bank has to bear both the cost, it may become unviable again,” said said Dilip Kumar Mukherjee, secretary general, All India Regional Rural Bank Employees Association. 

This apart, the existing infrastructure available with the RRBs were not considered adequate to handle the Financial Inclusion programme effectively, he added. “Acute shortage of manpower, low level of technological upgrade, non-feasibility of business correspondent model due to geographical locations, particularly in the north east region, are working as deterrents in the financial Inclusion programme to its fullest sense,” said Mukherjee. 

The association had earlier opposed the recommendation for scrapping the industry-wise wage settlement system suggested by the Khandelwal Committee. The committee headed by A K Khandelwal, former Chairman and Managing Director, Bank of Baroda, has recommended that each public sector bank should be allowed to settle salaries for its employees in accordance with their specific skill sets and the banks' overall performance.