Cabinet approves extension of Regional Rural Banks' recapitalisation scheme

The government said that his will enable the RRBs to maintain the minimum prescribed Capital to Risk Weighted Assets Ratio of 9 percent.

New Delhi: The Union Cabinet on Wednesday approved extension of recapitalisation scheme for Regional Rural Banks (RRBs) for next three years up to 2019-20.

The government said that his will enable the RRBs to maintain the minimum prescribed Capital to Risk Weighted Assets Ratio (CRAR) of 9 percent.

The scheme started in 2010-11 and was extended twice in 2012-13 and 2015-16. The last extension was up to March, 2017.  A total of Rs 1,107.20 crore, as government's share, out of Rs 1,450 crore, has been released to RRBs till March last year.

The remaining Rs 342.80 crore will be utilised to provide recapitalisation support to RRBs whose Capital to Risk Weighted Assets Ratio (CRAR) is below 9 per cent, during 2017-18, 2018-19 and 2019-20.

“A strong capital structure and minimum required level of CRAR will ensure financial stability of RRBs which will enable them to play a greater role in financial inclusion and meeting the credit requirements of rural areas,” an official release said.

RRBs were set up with the objective to provide credit and other facilities, especially to the small and marginal farmers, agricultural labourers, artisans and small entrepreneurs in rural areas for development of agriculture, trade, commerce, industry and other productive activities.

RRBs are jointly owned by centre, the concerned state government and sponsor banks with the issued capital shared in the proportion of 50 percent, 15 percent and 35 percent, respectively.