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Tuesday, November 13, 2012

RRBs need to open 1,700 branches this fiscal: RBI report

The 82 regional rural banks (RRBs) in the country need to achieve a 10 per cent growth in branch expansion in 2012-13. This, in spite of RRBs failing to achieve their branch expansion targets in the last two financial years.

The RBI’s ‘Report on Trend and Progress of Banking in India 2011-12’ says that the RRBs are required to open around 1,700 branches during 2012-13.

As per the Government’s advice, RRBs were to open around 2,000 branches during 2010-11 and 2011-12, however, they fell short of the target. They opened 521 branches and 913 branches during 2010-11 and 2011-12, respectively.

The report said the Government has advised all sponsor banks of RRBs that 10 per cent of the existing RRB branch network will be the target for the year 2012-13. As on March 31, 2012, RRBs had a network of 16,914 branches.

“Accordingly, RRBs will be required to open 1,700 branches during the year 2012-13,” the report said.


The Government’s plan to recapitalise RRBs is yet to gain momentum in some States.

Based on the recommendations of the K.C. Chakrabarty committee to study the current level of capital to risk-weighted assets ratio (CRAR) of RRBs, the Government had announced a recapitalisation programme in 40 of the 82 RRBs to ensure that their CRAR level reaches nine per cent by March 2012.

The Government, along with other shareholders, decided to recapitalise the RRBs by infusing Rs 2,200 crore. As a result of this, the shareholders such as the Government, sponsor banks and State Governments were to infuse Rs 1,100 crore, Rs 800 crore and Rs 300 crore, respectively.

The Central Government made a budgetary provision of Rs 500 crore for 2011-12 for this purpose.

Following this, the shareholders released Rs 1,000 crore to 27 RRBs in 16 States as on March 31, 2012.

The report said that the recapitalisation is complete in 16 RRBs. “Six State governments have not released any amount for 13 RRBs,” it said.

RRBs recorded net profit of Rs 2,000 crore in 2011-12 (Rs 1,700 crore), a 17.6 per cent growth. The CD (credit-deposit) ratio increased to 63.3 per cent (59.5 per cent) during the year.


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