Ensure Credit To Small, Micro Enterprises: FM Sitharaman To Regional Rural Banks

Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman, presided over a review meeting of Regional Rural Banks (RRBs) on Monday in New Delhi. The meeting was attended by key stakeholders, including the Secretary-designate of the Department of Financial Services (DFS), senior officials from DFS, representatives from the Reserve Bank of India (RBI), SIDBI, NABARD, as well as Chairpersons of RRBs and CEOs of sponsor banks.

Representatives from all 43 RRBs, centered around improving business performance, upgrading digital services and fostering business growth in rural and MSME clusters, ministry said in a statement.

The Finance Minister commended RRBs for their role in supporting the rural economy, while also urging them to enhance their efforts in identifying beneficiaries for key government schemes such as the PM Vishwakarma and PM Surya Ghar Muft Bijli Yojana.

During the meeting, Sitharaman appreciated the improvements in financial performance and technology upgrades achieved by RRBs since the initiation of regular reviews in 2022. She highlighted that RRBs had recorded their highest-ever consolidated net profit of Rs 7,571 crore for the fiscal year 2023-24, alongside a Gross Non-performing Assets (GNPA) ratio of 6.1 per cent, the lowest in a decade.

Sitharaman emphasised the critical need for RRBs to modernise their digital banking services, including mobile banking, particularly in regions with challenging physical connectivity such as the North Eastern states and hilly areas. Sponsor Banks were urged to provide the necessary technical assistance and share best practices to help RRBs strengthen their technological infrastructure.

The Finance Minister also focused on the importance of RRBs in promoting credit access to small and micro-enterprises, particularly in MSME clusters engaged in industries such as textiles, handicrafts, leather, food processing and dairy farming. She called on RRBs to develop tailored MSME products that align with local cluster activities and leverage their personal connections to boost banking penetration.

SIDBI was directed to assist RRBs in exploring co-lending and risk-sharing models, as well as providing refinance support for the MSME sector.