RRBs seek treatment at par with other banks

Regional rural banks (RRBs), which have been playing a key role in rural lending, are now seeking more visibility and parity with commercial banks.

The RRBs have complained to the government that some state governments, corporations and embassies are not treating them on par with other banks.

For instance, some corporations and state governments are not placing funds with RRBs on the plea that they are not on par with nationalised banks. Similarly, some corporations are not accepting demand drafts or pay orders issued by these banks. Some embassies were not accepting the educational loans sanctioned or guaranteed given by RRBs.

The government has assured the banks that it will take up the matter with department of public enterprises, the ministry of external affairs and industry bodies such as Ficci, Confederation of Indian Industry and Assocham.

Sources said that some chairmen of RRBs have requested the government to allow them to open representative offices or service branches in states capitals. The government has asked the Reserve Bank of India and Nabard to examine the proposal.

After mergers, there are 88 regional rural banks in the country now, as against 195 in 2005. The Centre is the largest shareholder with 50 per cent equity share capital in RRBs, followed by sponsor commercial banks (35 per cent).