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Rajya Sabha
Several Working Groups and Committees were set up from time to time to deliberate on the issues relating to Regional Rural Banks (RRBs) with focus on suggesting measures to improve the working and financial status of RRBs. Recently, Reserve bank of India (RBI) has constituted an Internal Working Group on RRBs under the Chairmanship of Shri A.V. Sardesai, Executive Director of RBI to examine, inter-alia, the working of RRBs and suggest measures to strengthen and reposition them as an effective instrument of credit delivery in the Indian financial system. There is no proposal to bring these banks under control of an apex bank and bring them under administrative and financial control of NABARD to make them village oriented.
Reserve bank of India (RBI), National Bank for Agriculture and Rural Development (NABARD) and Government of India have introduced several policy measures for improving the conditions of RRBs. The important amongst them are as under:-
Government has decided that each sponsor bank will be held squarely accountable for the performance of RRBs under its control. RRBs that adopt a new governance standard and that abide by the prudential regulations will qualify for receiving funds from the Government for restructuring.
With a view to strengthen and improve the viability of RRBs, a process has been initiated for structural consolidation of RRBs by amalgamation of geographically contiguous RRBs sponsored by the same bank within a State.
In order to reduce NPAs as also to improve recovery, compromise settlement of dues through Lok Adalats has been introduced.
In order to build up the skills and expertise of the personnel of RRBs, NABARD continued to give special priority to RRBs to train their staff through training institutions like Bankers Institute for Rural Development (BIRD), Lucknow, Regional Training Centres at Mangalore and Bolpur. RRBs officials are being trained in specialized areas like Project Management under Farm and Non-farm sectors, Asset-liability management, Fund Management, apart from training in the areas of Internal Control MIS, Personnel management and Industrial Relations.
Revised instructions were issued for maintenance of SLR by RRBs requiring them to maintain their SLR only in government and other approved securities.
In respect of loss incurring RRBs, Sponsor Banks have been advised to evolve Bank Specific Strategic Plan for attainment of viability in a fixed time frame.
RBI has constituted an Empowered Committee in its Regional offices with members drawn from NABARD, sponsor banks, convenors of SLBCs and States Governments to ensure that RRBs adhere to good governance and comply with prudential regulations. The Committee would also focus on operational issues and provide clarification on regulatory issues.
This information was given by Shri S.S. Palanimanickam, Minister of State for Finance in reply to a question raised by Shri Harish Rawat in Rajya Sabha today.
BSC/BY/GN-317/05
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