RRBs will be strengthened: FM

New Delhi, Apr 25 (UNI) Finance Minister P Chidambaram today reiterated the resolve of the UPA government for enhancing the credit flow to rural masses and assured that all necessary steps will be taken to strengthen Regional Rural Banks (RRBs) to achieve this.

Addressing members of Parliamentary Consultative Committee attached to his Ministry, Mr Chidambaram said the process for structural consolidation of RRBs by amalgamating them started two years back has been completed in March 2007. As a consequence the number of RRBs has been reduced to 96 from 196.

Due to amalgamation of RRBs, the number of such Banks making profits has increased. Besides, they are in a position to provide better customer service with infrastructure due to pooling of experienced work force.

The Minister informed the members that he has given directions for the appointment of General Managers to oversee the work of RRBs. Lok Adalats were being constituted which will help to settle a large number of NPAs.

Mr Chidambaram said the Government has adopted an aggressive Branch Expansion Policy and expects to cover all 80 uncovered districts within the current fiscal. The Government has also decided to extend Securitisation and Reconstruction of Financial Assets and Enforcement of Securitisation of Interest (SARFAESI) Act to loans advanced by RRBs. The notification in this regard will be issued shortly, he said.

The suggestions given by the members during the meeting include, loans for agro-based industries, insurance cover for farming loans by RRBs, loans for cold-storage, food-processing and fishing, proper training for the employees, ATM facilities in rural areas, more powers to the Branch Managers, strengthening of Self-Help Groups, and rebate for timely repayment of loans.

The Minister said the RRBs were playing an important role in developing the rural economy. RRBs have issued 69 lakh Kisan Credit Cards (KCCs) which is 11 per cent of total KCCs and have been advised by the government to increase the number of KCCs, he said.

The RRBs have formed 7.4 lakh SHGs till 2005-06 making the access easier to the farmers.

Addressing the concern expressed by the members, the Finance Minister said the RRBs have been directed to lend more money to non-farming community also within the rural population.

Deposits of RRBs increased by Rs. 9186 crore from Rs. 62,143 crore as on March 31, 2005 to Rs. 71329 crore as on March 31, 2006. The percentage growth of deposits increased from 12.48 per cent in 2003-04 to 14.78 per cent during the year, which is the highest in the last three years. Borrowing of RRBs increased by Rs. 1,779 crore from Rs. 5,524 crore as on March 31,2005, to Rs. 7,302.59 crore as on March 31, 2006. The loan outstanding as on March 31, 2006, increased by Rs.6,842 crore and reached to Rs.39,713 crore from Rs.32,870 crore as on 2004-05 registering a growth rate of 21 per cent.

The investment of RRBs increased from Rs.36,762 crore as on March 31, 2005 to Rs. 41182 crore as on March 31,2006, registering a growth rate of 12.03 per cent.

UNI