The Hindu Business Line : Recapitalisation of RRBs in 8 States by end-March: Chidambaram

The eight States that have agreed to pay up their share of recapitalisation in cash are Chhattisgarh, Arunachal Pradesh, Tripura, West Bengal, Bihar, Assam, Nagaland and Jharkhand.

Mr P. Chidambaram

K.R. Srivats

New Delhi, Jan. 6 With eight States agreeing to pay up their share of recapitalisation in cash, the Finance Minister, Mr P. Chidambaram, has said that he was confident that all regional rural banks (RRBs) with negative networth in those States would be recapitalised before end-March.

“Eight States have responded positively. The day they put in their share, the Centre would put in its share and on the same day the sponsoring bank would also put in its share. I am confident that by March 31 RRBs with negative networth in those eight States would be recapitalised,” Mr Chidambaram said when asked about the status of RRB recapitalisation.

Official sources said that the eight States that have agreed to pay up their share of recapitalisation in cash are Chhattisgarh, Arunachal Pradesh, Tripura, West Bengal, Bihar, Assam, Nagaland and Jharkhand. RRBs are jointly owned by the Central Government, State Government and sponsor banks in the ratio of 50: 15: 35.

The Union Cabinet’s approval is likely to be soon sought for providing the Centre’s share in respect of those eight States that have agreed to pay up their share of recapitalisation in cash, sources added.

One of the budget proposals for 2007-08 was that RRBs having negative networth would be recapitalised in a phased manner.

As per the financial statements of RRBs for the year 2006-07, 29 RRBs are having negative networth amounting to Rs 1,857.05 crore.

With 2 RRBs getting amalgamated, one each in Uttar Pradesh and Orissa, the Finance Ministry has now pegged the recapitalisation need for 27 RRBs, based on the financial statements for 2006-07, at Rs 1,767.97 crore to make their networth equal to Rs 1 crore.

While Rani Lakshmibhai Kshetriya Gramin Bank in UP has been amalgamated with UP Gramin bank to form Sarv UP Gramin Bank, Puri Gramya Bank in the State of Orissa has been amalgamated with Dhankand Gramya Bank to form Neelachal Gramya Bank.

The State Governments of Chhattisgarh, Arunachal Pradesh and Tripura have confirmed the payment of their share of contribution in the current fiscal itself.

The West Bengal Government has confirmed the payment of its share in the current fiscal itself in respect of two RRBs namely — Paschim Banga Gramin Bank and Uttar Banga Shetriya Gramin Bank and partially for Bangiya Gramin Vikas Bank.

The Bihar Government has communicated confirmation of its share in two tranches — Rs 57.40 crore by March 31, and balance amount of Rs 15.39 crore in 2008-09.

The State Governments of Assam, Nagaland and Jharkhand have communicated their concurrence, in principle.