Government issues draft guidelines for listing of Regional Rural Banks (RRBs)
Recently the Ministry of Finance has issued draft guidelines for listing of Regional Rural Banks (RRBs).
As per these draft guidelines, RRBs will be eligible to get listed on the stock exchanges and raise funds. If they satisfy the following conditions:
- having a net worth of at least Rs 300 crore in the last three years;
- having a capital adequacy of 9% in each of the last three years; And
- Those who have recorded operations of at least Rs 15 crore in minimum three years out of the last five years.
The government had asked the Department of Financial Services to prepare a clear roadmap. The objective was to further strengthen RRBs in a time bound manner and take forward the post-pandemic economic reforms.
Regional Rural Banks (RRBs)-
- RRBs were established on 2nd October, 1975. For this an ordinance was issued in the year 1975. These were further strengthened the following year under the Regional Rural Banks (RRB) Act, 1976.
- These have been established with the objective of providing credit and other facilities to small farmers, agricultural laborers and artisans in rural areas.
- At present, the Center holds 50% stake in RRBs. The remaining 35% and 15% stake are held by the respective sponsor banks and state governments respectively.
- The RRB Act was amended in the year 2015. Under this amendment, RRBs were allowed to raise capital from sources other than the Centre, states and sponsor banks.
- 75% of the loan disbursement for RRBs has been earmarked for priority sector lending (PSL).
- Agriculture; Micro, Small and Medium Enterprises (MSMEs); education; Housing etc. sectors come under PSL.
Challenges before RRBs-
- Difficulties in raising deposits.
- In branch expansion, haste and lack of coordination.
- Slow progress in the lending process.
- Cumbersome processes.
- City oriented employees.
Source – The Hindu
