The Finance Minister, Mr Pranab Mukherjee’s proposal to allocate Rs 10,000 crore to National Bank for Agriculture and Rural Development for refinancing the regional rural banks (RRBs) is a welcome measure.
According to Mr Dilip Kumar Mukherjee, Secretary-General, All India Regional Rural Bank Employees Association, this would augment credit flow to the marginal and small farmers.
“Setting up of a short-term RRB credit refinance fund would enhance the capacity of RRBs to disburse short term crop loans to the small and marginal farmers,” Mr Mukherjee said.
The Government has also proposed extending the scheme of capitalisation of financially weak regional rural banks (RRBs) by another two years.
“The K.C. Chakrabarty Committee, had, in 2010 submitted its recommendation for recapitalisation support of Rs 2,200 crore for 40 RRBs. The Union Government had accepted the recommendation and extended its support, however, the various state governments have not come forth till now,” Mr Mukherjee said. This was coming in the way of capitalisation of financially weak RRBs.
The process of capitalisation has been undertaken in about 12 RRBs as on February 2012.
Out of 82 RRBs in the country, 81 have already migrated to core banking solutions and have also joined the national Electronic Fund Transfer system.