RRBs need Rs 2,200 cr by 2011-12

Around 40 regional rural banks (RRBs) will need Rs 2,200 crore recapitalisation by 2011-12, according to a committee set by the Reserve Bank of India (RBI).

According to the suggestion by the committee, headed by RBI Deputy Governor K C Chakrabarty, 40 out of the 82 regional rural banks would require Rs 2,200 crore by 2011-12. The committee suggested the amount be released in two instalments — Rs 1,338 crore in 2010-11 and Rs 863 crore in 2011-12.

The committee carried out an assessment of the capital requirement of all 82 RRBs to enable them to have capital adequacy ratio of at least seven per cent by March 31, 2011, and nine per cent from March 31, 2012. Other 42 regional rural banks will not require more capital.

Further, the committee suggested an additional amount of Rs 700 crore for regional rural banks in eastern and north eastern region. It recommended that the authorised capital be raised from Rs 5 crore to Rs 500 crore.

It said the accumulated losses as on March 31, 2010, be written off against the available share capital deposits, and the balance amount of share capital deposit appropriated as paid-up capital.

To build public confidence, the committee suggested that RRBs with high net worth be allowed to access capital from the market.