Rrbs Get Rs 573 Cr For Restructuring
In line with the government's focused strategy for improving the viability of the regional rural banks (RRBs) in the country, 136 RRBs have been provided financial support to the tune of Rs 573 crore for their comprehensive revamping.
'By according priority for revival of viable RRBs instead of tackling the problem in a generalised manner, we hope to considerably bring down the losses in the regional rural banks and make them stand on their own feet,' a senior finance ministry official said. 'The loss making tendencies in the regional rural banks will have to be tackled by studying the viability of each bank rather than thinking in terms of a universal panacea for their ills,' said the official.
As part of revamping the regional rural banks, the government has been providing recapitalisation support to select RRBs for cleansing up of their balance sheets. 'Perhaps the strategy lies in allowing these banks to start anew rather than carrying on with their earlier debts or unviability and work the package only by computing on their earlier losses,' said the official.
Though the RRBs have accumulated losses amounting to several hundred crores due to various factors, preparing of development action plans and execution of memoranda of understanding by RRBs with various sponsor banks on an annual basis have helped improve the performances of many of these banks, said the official.
According to the official, the RRBs have been advised to prepare bank-specific development action plans to enable them to adopt a systematic approach for their turn-around. Besides, the RRBs have been permitted by the Reserve Bank Of India to deploy a part of their surplus non-SLR (statutory liquidity ratio) fund in the credit portfolio of their sponsor banks. ''The sponsor banks would be able to issue a non-risk sharing certificate for the funds parked by these RRBs, '' said the official. The RBI has fully deregulated the interest rates that can be charged to the ultimate borrowers by the RRBs. 'This policy decision which was made effective from August 1996 has facilitated the RRBs in fixing their interest rates according to the feasibility of projects or their ratings of the clientele,'' he said.