Finance Minister Nirmala Sitharaman Urges Southern Regional Rural Banks to Boost Credit Support for Rural Economy and MSMEs

Bengaluru: Union Finance Minister Nirmala Sitharaman chaired a comprehensive review meeting in Bengaluru on Friday to assess the performance of ten Regional Rural Banks (RRBs) serving the southern states of Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Telangana, and the Union Territory of Puducherry. The meeting emphasized strengthening rural credit, especially for agriculture and allied activities, as well as bolstering support for micro and small enterprises (MSMEs) through digital and financial inclusion efforts.

The meeting was attended by Union Minister of State for Finance Pankaj Chaudhary, Department of Financial Services Secretary M. Nagaraju, representatives from the Reserve Bank of India, NABARD, SIDBI, as well as chairpersons of RRBs and sponsor banks. The discussions centered on enhancing credit growth, digital service upgrades, and the RRBs’ role in driving financial inclusion.

Finance Minister Sitharaman urged RRBs to expand their role in disbursing credit under key government schemes like MUDRA and PM Vishwakarma, with active support from sponsor banks. She highlighted the need for RRBs to increase their share in agricultural credit disbursement, focusing particularly on allied sectors like dairy, animal husbandry, and fisheries. She directed RRBs in Kerala and Telangana to work closely with state government departments to boost credit for the fisheries and dairy sectors, respectively.

Sitharaman praised the RRBs for their improved financial performance since regular reviews began in 2022. The RRBs in the southern region posted a consolidated profit of ₹3,816 crore in FY 2024, accounting for over half of the net consolidated profit of all RRBs in India, with a healthy CRAR of 17.6% and a GNPA of 3.94%. She emphasized the importance of Current Account Savings Account (CASA) deposits, urging RRBs to mobilize these funds to support sustainable credit growth.

Minister of State for Finance Pankaj Chaudhary echoed Prime Minister Narendra Modi’s vision for financial inclusion, calling on RRBs to maximize achievements under government schemes like Pradhan Mantri Jan Dhan Yojana (PMJDY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY), and Atal Pension Yojana (APY). Sitharaman urged RRBs to achieve saturation in Financial Inclusion targets and asked sponsor banks to rework targets for these schemes.

Emphasizing support for MSMEs, Sitharaman encouraged RRBs and SIDBI to collaborate on digital platforms, focusing on co-lending and risk-sharing models. She also commended the technological advancements made by RRBs, including customer-centric digital services like micro-ATMs, net banking, and Video KYC, and called for further promotion of these services.

Additionally, the Finance Minister directed the Department of Financial Services to review recruitment rules for RRBs, ensuring candidates have local language proficiency. She also sought feedback from state governments on the proposal of amalgamating RRBs on the principle of “One State-One RRB” to streamline operations and enhance efficiency.