Lok Sabha Question No. 292 (STARRED), answered on 2016-08-05
Subject: Regional Rural Banks
Ministry: FINANCE
Asked by: KRISTAPPA NIMMALA

## Government of India Ministry of Finance Department of Financial Services

## LOKSABHA STARRED QUESTION NO.*292

To be answered on the August05, 2016/Sravana 14, 1938 (SAKA)

## Regional Rural Banks

*292: SHRINIMMALAKRISTAPPA:

Will the Minister of FINANCE be pleased to state: (a) whether the Government has reviewed the working of the Regional Rural Banks (RRBs)  during  the  last  three  years  and  if  so,  the  details  thereof  along  with  the deficiencies noticed therein and the corrective action taken thereon; (b) whether  the  Government  has  taken  any  decision  to  bring  RRBs  at  par  with Public Sector Banks and if so, the details thereof; (c)   whether the employees of RRBs have been demanding pay parity with those of Public Sector Banks from time to time; and

- (d)   if so, the reaction of the Government thereto?

## Answer FINANCE MINISTER

## (ARUNJAITLEY)

- (a) to (d):  A Statement is laid on the Table of the House.

*********

## Statement referred to in reply to parts (a) to (d) to LokSabha Starred Question No. *292 to be answered on 5 th  August, 2016 regarding 'Regional Rural Banks'

(a): In  terms  of  Section  35(6)  of  Banking  Regulation  Act,  1949,  the  supervisory inspection  of  RRBs  is  carried  out  by  the  National  Bank  for  Agriculture  and  Rural Development(NABARD). Accordingly, NABARD has been reviewing the performance of Regional Rural Banks (RRBs) every year on regular basis.   During last  three  years,  the  review  of  RRBs  was  taken  on  25 th   February,  2014,  18 th February, 2015, 11 th  July, 2015, 21 st  January, 2016 and 11 th  July, 2016.

During the latest Review meeting held on 11 th  July, 2016, the main areas of concern were deliberated and the same are given in Annex-I .

(b)to (d):   The Regional Rural Banks (RRBs) were established under the provisions of the Regional Rural Banks Act, 1976.  The Public Sector Banks(PSBs) were set up under the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970, Companies Act, 2013, State Bank of India Act, 1955 and SBI(Subsidiary) Act, 1959.

The pay scales of RRBs are decided based on the Bipartite Settlements signed by Indian  Banks  Association  (IBA)  and  Unions/Associations  of  employees  of  Public Sector Banks.   On the basis of 10 th  Bipartite Settlement signed on 25 th  May, 2015, the pay scales of RRB employees were revised on 31 st  July, 2015.

## Major issues with RRBs

## 1. Recapitalisation

RBI has stipulated norms for Capital to Risk Weighted Assets Ratio (CRAR) of 9% as minimum requirement for RRBs. In cases where CRAR is less than 9%, recapitalisation  assistance  is  required  to  be  provided  by  Central  Government, Sponsor  Bank  &  State  Government  in  the  proportion  of  50%,  35%  &  15% respectively.

## 2.Priority Sector Lending

The  share  of  Priority  Sector  advances  of  RRBsincreased  from  84%  as  on 31 st March 2015 to 87% as on 31 st March, 2016.

## 3. Agri Loans:

The share of RRBs in agricultural loans increased from 61% of the total loans outstanding as on 31 st March, 2015, to 64% on 31 st March, 2016.

## 4.Term Loans:

As on 31 st March, 2016, term loans of RRBs stood at Rs.36,110 crore accounting for  17%  of  the  total  outstanding  loans  as  against  Rs.28,027  crore  as  on 31 st March, 2015 which constituted 15% of the total loans outstanding.

## 5.Recovery Performance

The level of overdues of RRBs increased from Rs.19,290 crore as on 30 th  June, 2014  to  Rs.23,578  crore  as  on  30 th June,  2015. In  percentage  terms,  the recovery position improved from 79.50% as on 30 th June, 2014 to 82.56% as on 30 th June, 2015.

[The figures relate to 31 st March, 2016(unaudited) as reported by RRBs]