Govt aims to make regional rural banks sustainable through increased MSME lending

New Delhi, Aug 2 (KNN) The government has asked Regional Rural Banks (RRBs) to improve their lending to the Micro, Small and Medium Enterprises (MSME) sector to expand their credit base in order to become financially sustainable.

Centre has also noted that the RRBs need to adopt digitisation including offering internet banking services to its customers as a part of its reform.

The government wants them to work towards increasing their earnings as the cost of operations of RRBs were much lower as compared to scheduled commercial banks but that has increased now, as per a report by Indian Express.

These measures were discussed in July during a meeting convened by Finance Minister Nirmala Sitharaman and attended by heads of sponsor banks and RRBs.

She has urged the sponsor banks “to formulate a clear roadmap in a time-bound manner to further strengthen the RRBs and support the post-pandemic economic recovery and also suggested to conduct a workshop of RRBs and share the best practices with each other”.

Many of the branches do not have enough business as they focus mainly on offering government’s schemes like direct benefit transfer in the rural areas of the country.

This has been noted as one of the key reasons for RRBs incurring losses.  (KNN Bureau)