Significant improvement in RRB's performance

New Delhi, Jan 25 (UNI) The Regional Rural Banks (RRBs) have shown a considerable improvement in their performance as their business has increased from Rs 82,463.95 crore in the year 2002-03 to Rs 1,11,041.40 crore in 2005-06.

The issued capital of RRBs is shared by Central Government, sponsor bank and the State Government in the proportion of 50 per cent, 35 per cent and 15 per cent respectively.

The area of operation of a majority of the RRBs is limited to a notified area comprising a few districts in a State.

As on March 31, 2006, RRBs are operating with a network of 14,494 branches covering 525 districts out of 605 districts in the country in 26 States.

In the year 2005, a process was initiated for the structural consolidation of RRBs sponsored by the same bank within a State. As a result of amalgamation, 196 RRBs were reduced to 133 by way of amalgamation as on March 31, 2006 and have been further reduced to 102, as on date.

The amalgamated RRBs will reap benefits of staff rationalisaton, increased quantum of advances and investments on the increased capital base and the benefit of larger resources and economies of scale.

The agricultural loans by RRBs have increased from Rs 7,174.97 crore in the year 2003-04 to Rs 15,298.88 crore in the year 2005-06 and has thus more than doubled during the period of three years.

On the other hand, their Gross NPA has also reduced from 12.63 per cent in the year 2003-04 to 7.28 per cent in the year 2005-06, while Net NPA has come down from 8.55 per cent in the year 2003-04 to 3.92 per cent in the year 2005-06 during this period.

The establishment of the RRBs was initiated in 1975 under the provisions of the ordinance promulgated on September 26, 1975 and thereafter Section 3(1) of the RRB Act, 1976.

UNI