Finance Minister Nirmala Sitharaman asked the regional rural banks on Monday to create suitable financial products that align with the needs of the micro, small and medium-enterprises clusters to boost banking penetration.
During a review meeting with RRB chairpersons and chief executive officers of their sponsor banks, Sitharaman stressed the importance of the RRB branches actively engaging with clusters in sectors like textiles, wooden furniture, leather, food processing and packaging materials, which offer significant opportunities for expanding loan portfolios.
Sitharaman also highlighted the need for the RRBs to address challenges by maintaining asset quality, enhancing digital services, and ensuring strong corporate governance. She emphasised that the RRBs must adopt up-to-date technology stacks to remain relevant, noting that digital banking services like mobile banking could greatly benefit regions with limited physical connectivity, such as northeastern states and hilly areas.
The finance minister underscored the role of sponsor banks in supporting the RRBs through technical assistance, best practice sharing, and resource provision. She encouraged the RRBs to focus on accurately identifying beneficiaries when sanctioning loans under schemes like PM Vishwakarma and PM Surya Ghar Muft Bijli Yojana and to increase their share of agriculture credit disbursement.
Sitharaman acknowledged the improvement in the RRB financial performance and technology upgrades since regular reviews began in 2022. She praised the RRBs for achieving their highest-ever consolidated net profit of Rs 7,571 crore in 2023–24 and achieving the lowest gross non-performing assets ratio of 6.1% in the past decade. The meeting also featured senior officials from the Department of Financial Services, Reserve Bank of India, Small Industries Development Bank of India and the National Bank for Agriculture and Rural Development.
Earlier in the day, the finance minister also reviewed the financial performance of public sector banks in her first review meeting following the presentation of the full Budget for 2024–25.
(With inputs from PTI)
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