Cabinet approves ₹1,340 crore recapitalisation of regional rural banks

ANI New Delhi, India Mar 25, 2020, 07.06 PM(IST)

File photo: Union Minister Prakash Javadekar. Photograph:( ANI )

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These banks are primarily catering to the credit and banking requirements of the agriculture sector and rural areas with a focus on small and marginal farmers, micro and small enterprises, rural artisans and weaker sections of the society.

Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved ₹1,340 crore recapitalisation of regional rural banks to improve their capital to risk-weighted assets ratio.

Union Minister Prakash Javadekar said the CCEA approved the utilisation of ₹670 crore as the Central government's share for the scheme.

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The decision will provide minimum regulatory capital to regional rural banks for another year beyond 2019-20, that is up to 2020-21 for those which are unable to maintain minimum capital to risk-weighted assets ratio (CRAR) of 9 per cent as per regulatory norms prescribed by the Reserve Bank of India (RBI).

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A financially stronger and robust regional rural banks with improved CRAR will enable them to meet credit requirement in rural areas, according to an official statement.

As per RBI guidelines, regional rural banks have to provide 75 per cent of their total credit under priority sector lending (PSL).

These banks are primarily catering to the credit and banking requirements of the agriculture sector and rural areas with a focus on small and marginal farmers, micro and small enterprises, rural artisans and weaker sections of the society.

The government has initiated structural consolidation of regional rural banks in three phases, thereby reducing their number from 196 in 2005 to 45 now.