Focus on digital capability upgrade, FM Sitharaman tells rural banks

The Centre has a 50 per cent stake in RRBs while sponsor banks and state governments own 35 per cent and 15 per cent, respectively

Nirmala Sitharaman (Photo: PTI)

Nirmala Sitharaman (Photo: PTI)

Nikesh Singh

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Union Finance Minister Nirmala Sitharaman on Wednesday emphasised regional rural banks (RRBs) to upgrade their digital capability and increase penetration under Pradhan Mantri Mudra Yojana. A senior finance ministry official said that all sponsor banks have initiated steps for the introduction of customer-oriented banking services in RRBs. “Banks should map RRBs with Micro, Small, and Medium Enterprise clusters and put greater thrust on increasing the network of rural branches in cluster areas identified by the ministry of MSME,” Sitharaman added while chairing a review meeting of RRBs from Northern region in New Delhi. Sitharaman told the managing director and chief executive officer of PNB to ensure that all RRBs within the bank should acquire digital onboarding capability by November 1.

The Centre has a 50 per cent stake in RRBs while sponsor banks and state governments own 35 per cent and 15 per cent, respectively.

The meeting was attended by senior officials from the department of Financial Services, Reserve Bank of India, National Bank for Agriculture and Rural Development (NABARD), sponsor banks.

The finance minister urged RRBs to facilitate storage facility for apple growers particularly in Jammu & Kashmir and Himachal Pradesh.

Sitharaman emphasised RRBs to increase penetration under financial inclusion schemes and stated that a roadmap has to be prepared for completing the designated activities in a time-bound manner.

The Department of Financial Services is also working with RRBs to onboard them on the account aggregator framework. This will allow lending to the allied agriculture sector like fisheries and animal husbandry, besides granting loans to street vendors under PM SVANidhi scheme.

Earlier, Business Standard has reported that the Centre is likely to infuse capital in certain regional rural banks (RRBs) during 2023-24, depending on their performance and adoption of digitisation. 

RRBs capitalisation will depend on broad parameters such as NPA reduction, credit expansion, business diversification and improvement in corporate governance, a senior finance ministry official said.

First Published: Aug 31 2023 | 12:13 PM IST

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