Money & Banking

Lacklustre show by RRBs in 2018-19: RBI report

A J Vinayak Mangaluru | Updated on December 25, 2019 Published on December 25, 2019

Lacklustre growth in interest income, decline in operating profits, and a considerable growth in wage bills affected the performance of Regional Rural Banks (RRBs) in 2018-19.

Reserve Bank of India’s (RBI) Report on ‘Trend and Progress of Banking in India 2018-19’ noted that the operating profits of RRBs declined in 2018-19, after two consecutive years of acceleration.

The operating profit of RRBs came down to ₹5,619 crore (provisional) in 2018-19 against ₹7,543 crore in 2017-18. Though the cumulative net profit of RRBs was ₹1,501 crore in 2017-18, the provisional figures showed a loss of ₹548 crore in 2018-19.

The report said that the increase in interest income was lacklustre in 2018-19. The provisional interest income of RRBs was at ₹38,953 crore in 2018-19 against ₹38,337 crore in 2017-18, recording a growth of 1.6 per cent.

The operating expenses of RRBs increased to ₹13,510 crore (provisional) against ₹11,019 crore in 2017-18. Of this, expenses related to wage bills increased to ₹9,457 crore (₹7,044 crore) in 2018-19, an increase of 34.2 per cent.

The emphasis of RRBs’ lending remained on the priority sector. Within this sector, agriculture garnered a share of 77.1 per cent. Though the balance sheet of RRBs is 3.3 per cent that of scheduled commercial banks (SCBs), their agriculture lending constitutes 14.8 per cent of SCB’s lending to the sector.

The priority sector advances of RRBs stood at ₹2,55,156 crore (₹2,27,941 crore). Of this, agriculture advances stood at ₹1,96,632 crore (₹1,73,726 crore).

From 196 RRBs in 2005, the number of RRBs in the country has come down to 45 as at April 1. The report said that the target is to further consolidate them into 38 RRBs to minimise overhead expenses, enhance capital, and expand their area of operation.

RRBs were formed under the RRB Act 1976, with the objective of providing credit and related banking facilities to small farmers, agricultural labourers, artisans, and other rural poor.

Published on December 25, 2019
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