Profitability Of Rural Banks Improves 33% In 2000-01

Regional Rural Banks (RRBs) have posted improved profitability during 2000-01. Operating profit of 192 RRBs rose by 33.2 per cent to Rs 715 crore, while their net profit increased by 37 per cent to Rs 589 crore. The ratio of operating profit to total assets of these RRBs increased from 1.27 per cent to 1.47 per cent, while the net profit to total assets ratio increased from 1.01 per cent to 1.21 per cent.

According to the banking review released by the Reserve Bank of India recently, increase in profitability of RRBs was mainly due to rise in interest income coupled with lower operating expenses.

 

The quantum of NPAs of RRBs declined considerably during 2000-01. Their NPAs to total assets assets declined from 23.2 per cent in 1999-00 to 19.2 per cent in 2000-01.

Deposits mobilised by the RRBs registered a 23.2 per cent rise to Rs 37,027 crore in 2000-01 with demand deposits rising 27.3 per cent. Credit extended by the RRBs increased by 23 per cent to Rs 15,579 crore and investments rose by 25.6 per cent to Rs 7,546 crore.

The credit-deposit ratio of these banks rose 42.1 per cent in 2000-01, while investment-deposit ratio increased marginally to 20.4 per cent.

While demand deposits increased 27.3 per cent to Rs 6,499 crore compared with Rs 5,105 crore in 1999-00, time deposits rose 22.4 per cent to Rs 30,528 crore compared with Rs 24,946 crore in 1999-00.

On the borrowings side, the RRBs reduced their liabilities to Rs 24 crore from Rs 52 crore, thus registering a -28 per cent change.

The advances by the RRBs to commercial banks rose by 23 per cent to Rs 15,597 crore in 2000-01 compared with Rs 12.663 crore in 1999-00.

The RRBs invested Rs 1,588 crore in government securities compared with Rs 1,223 crore in 1999-00. Investments in other approved securities increased by 24.5 per cent to Rs 5,958 crore compared with Rs 4,786 crore in 1999-00.

Loans and advances disbursed by RRBs for agriculture sector accounted for 47.5 per cent of total advances in 2000-01. Term loans for agriculture and allied activities stood at Rs 3,339 crore. Of this, 53.6 per cent accounted for agricultural advances, while 46 per cent accounted for crop loans.

Non-agricultural loans such as advances to rural artisans, village and cottage industries, retail trade, self-employed, and others accounted for 52.5 per cent of total loans and advances during 2000-01.

A total of Rs 2,188 crore has been infused as additional capital support to 187 RRBs, out of 196, through 6 phases. Out of these 187, 158 have been fully recapitalised and 29 have been partially recapitalised.

Further, while 7 RRBs are yet to be taken up for recapitalisation, 2 do not need any capital support.

While during 2000-01 no recapitalisation was taken up by the government, no budgetary allocation has been made for the year 2001-02.