On August 19, 2024, Union Finance Minister Smt. Nirmala Sitharaman led a review meeting with Regional Rural Banks (RRBs) in New Delhi. The session, attended by the Secretary-Designate of the Department of Financial Services (DFS), Additional Secretary, senior DFS officials, RBI, SIDBI, NABARD representatives, RRB Chairpersons, and CEOs of sponsor banks, focused on business performance, digital technology upgrades, and business growth in MSME clusters.
The meeting included participation from all 43 RRBs, which discussed enhancing digital technology services and improving business performance. Minister Sitharaman emphasized the need for RRB branches to actively engage with MSME clusters to ensure effective credit access for small and micro enterprises. She urged RRBs to create tailored MSME products aligned with cluster activities and to leverage their local connections to boost banking penetration.
Smt. Sitharaman commended the RRBs for their improved financial performance and technological advancements since the regular reviews began in 2022. RRBs reported their highest-ever consolidated net profit of ₹7,571 crore for FY 2023-24, with a Gross Non-Performing Assets (GNPA) ratio of 6.1%, the lowest in the past decade.
She highlighted the importance of up-to-date technology for RRBs to remain relevant, noting that digital services such as mobile banking are particularly beneficial in areas with limited physical connectivity, like North Eastern states and hilly regions. Sponsor Banks are expected to provide technical support, share best practices, and ensure RRBs have the necessary resources.
Minister Sitharaman stressed the importance of targeting MSME clusters, including textiles, handicrafts, food processing, and dairy farming, to expand the RRBs’ loan portfolios. She also directed SIDBI to assist RRBs with co-lending and risk-sharing models and to extend refinancing options for MSMEs.
Finally, Smt. Sitharaman urged Sponsor Banks and RRBs to address forthcoming challenges by focusing on asset quality, digital service expansion, and robust corporate governance.
