Regional Rural Banks (RRBs) reported their highest-ever consolidated net profit of Rs 7,571 crore in the financial year 2023-24, reflecting significant improvements in their financial health.
The performance of RRBs strengthened over the years, with steady growth witnessed in key financial metrics, Minister of State for Finance Pankaj Chaudhary informed the Rajya Sabha in a written reply on Tuesday.
The minister noted that RRBs consistently improved in crucial financial parameters such as the Capital to Risk-Weighted Assets Ratio (CRAR), deposits, advances, non-performing assets (NPAs), and the credit-to-deposit (CD) ratio, reported PTI.
The total balance sheet size of RRBs expanded from Rs 7,04,556 crore in 2021-22 to Rs 8,40,080 crore in 2023-24. Additionally, net NPAs witnessed a sharp decline, reducing from 4.7 per cent in 2021-22 to 2.4 per cent in 2023-24, further strengthening the sector’s financial position.
The CD ratio also increased significantly from 64.5 per cent in 2021-22 to 71.4 per cent in 2023-24, indicating higher credit disbursement.
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Boosting Rural Financial Inclusion and Loan Schemes
The government also assessed the progress of RRBs in expanding financial inclusion in rural and remote areas. Chaudhary highlighted that the banks have been instrumental in implementing various financial inclusion initiatives such as the Pradhan Mantri Jan Dhan Yojana, Pradhan Mantri Suraksha Bima Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana, and Atal Pension Yojana.
Responding to another query, Chaudhary elaborated on the Modified Interest Subvention Scheme (MISS), under which the Centre provides an interest subvention of 1.5 per cent to banks for offering short-term working capital loans of up to Rs 3 lakh at an annual interest rate of 7 per cent. Farmers who repay their loans on time receive an additional 3 per cent interest incentive, effectively reducing their borrowing cost to 4 per cent.
Notably, the Union Budget 2025-26 proposed an increase in the loan limit under MISS from Rs 3 lakh to Rs 5 lakh for loans availed through the Kisan Credit Card (KCC). This was intended to enhance access to affordable credit for farmers.
