regional rural bank

Union Cabinet approves Rs 632 crore capital infusion in RRBs
Government approved capital infusion of Rs 632 crore in some RRBs (Regional Rural Banks).
Objective: To improve CRAR [Capital to Risk (Weighted) Assets Ratio] for RRBs. Thus to improve their capital adequacy and lending capacity to the agriculture sector.Adopting good word of RBI deputy governor K C Chakrabarty, the Govt had started recapitalization process in 2009-10 for 40 financially weak RRBs, which chiefly furnish credit to rural and agriculture sectors. Yet, till March 2012, capitalization was done only in 16 of the banks as various states didn’t furnish their share. To complete the process of recapitalization, the Cabinet has determined to stretch the scheme by 2 years. The Union Cabinet sanctioned the release of 50% share of the central government for recapitalization of the remaining RRBs.The issue of central government’s share is subject to the release of state government’s and sponsor bank’s share.

 The capital of RRBs is apportioned by Centre, states and the sponsor bank in the ratio of 50%, 15% and 35%respectively.Thus, in principle, these 16 RRBs would receive Rs 1,264 crore of fresh capital if all stakeholders contribute in proportion to their shares for recapitalization.
 There are around 82 RRBs in India and nearly all of them are outfitted with core banking solutions.





Rural banks told to double home loan limit for priority sector

The RBI has demanded all RRBs (Regional Rural Banks) to double the limit for home loans to Rs 10 lakh
from Rs 5 lakh for lending for the Priority Sector. The increment in the limit will be applicable for the
bank loans extended to non-governmental agencies, sanctioned by National Housing Bank for their
refinance, on-lending for the function of construction or reconstruction of individual dwelling units and
rehabilitation of slum dwellers.









RRBs can launch branches in Tier-II cities without RBI permission
The RBI has allowed Regional Rural Banks (RRBs) to open branches in Tier-II cities without asking for permit.As per a notification by RBI, RRBs would be allowed to launch branches in Tier-II cities with a population of 50,000 to 99,999 as per 2001 census with certain conditions. The decision has been taken to increase the reach of banking services in Tier-II cities.
RRBs will also have authority to take decision on the applications of RRBs for opening, shifting, merger or conversion of branches without reference to the concerned Empowered Committees in order to speed up the process.