Finance Minister Urges North East RRBs to Boost Agri and Allied Sector Credit

Union Finance Minister Nirmala Sitharaman held a key meeting in Itanagar to review the performance of seven Regional Rural Banks (RRBs) operating in the North Eastern states of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura. The meeting was attended by senior officials from the Department of Financial Services (DFS), NABARD, RBI, as well as representatives from sponsor banks like State Bank of India and Punjab National Bank. The discussions focused on improving rural banking and driving growth in agriculture, horticulture, and MSME sectors.

Image: Union Finance Minister Nirmala Sitharama reviewing RRBs in NE region

Image Source: PIB

North East RRBs Show Financial Improvement in FY24 

In a significant turnaround, the RRBs of the North East registered a net profit of Rs. 205 crore for FY24, compared to a loss of Rs. 11 crore in the previous fiscal year. The Consolidated Capital to Risk-weighted Assets Ratio (CRAR) of 15% for FY24 reflects strong financial health. Sitharaman praised the reduction in Gross Non-Performing Assets (GNPA), which dropped from 15.6% in FY22 to 7.3% in FY24. This improvement highlights the impact of the government's continuous efforts since the regular reviews began in 2022. 

Image: Review of NE RRBs attended by officials of DFS, NABARD, RBI, Sponsor Banks

Image Source: PIB

Focus on Agriculture, Horticulture, and MSME Growth

Sitharaman emphasised that RRBs should enhance credit distribution in agriculture, horticulture, and allied activities like piggery, sericulture, and fisheries, which are vital for the rural economy. She urged RRBs to promote schemes like MUDRA and PM Vishwakarma while also encouraging the development of Farmer Producer Organizations (FPOs) in collaboration with NABARD. Addressing the challenge of land record availability for agricultural credit was a key point of discussion. Additionally, expanding mobile veterinary units across districts emerged as another crucial issue.

In addition, the Finance Minister directed that State Level Bankers' Committees (SLBCs) should convene special meetings to explore untapped potential in sectors such as floriculture and animal husbandry. She also called for RRBs to design products tailored to MSME activities, leveraging their local presence to increase market penetration.

Recruitment Policy and Technology Upgradation

The Finance Minister’s review is seen as crucial by the RRB workforce in the Northeastern region, though a few key issues have been raised to further improve their performance.

Samiran Medhi, General Secretary of the Assam Gramin Vikash Bank Employees Association, regarded the Finance Minister’s review as a significant step forward. Speaking to Kanal, he said, “We appreciate the initiative taken by the Hon’ble Finance Minister and are hopeful that the government will prioritise technological upgradation for RRBs in the Northeast. At present, these banks fall behind other institutions in terms of technology.”

Medhi also highlighted the region’s unique diversity and the importance of localised recruitment. “Given the distinct regional identities of the Northeastern states, we strongly advocate for a specialised recruitment policy. This approach would not only create job opportunities for local residents but also help preserve the region's cultural identity, ensuring that RRBs can address the specific needs of the communities they serve. Such steps are critical for ensuring growth and success across all sectors in the region,” he added.

RRBs across India are grappling with the challenges of disparity, cross selling of TPPs, staff shortages, and issues of manpower policy.

Expanding Banking Access in North East

Recognizing the need for greater banking coverage in underserved areas, Sitharaman directed RRBs, with support from their sponsor banks and NABARD, to open new banking touchpoints in regions that lack access, particularly in Nagaland and Arunachal Pradesh. This initiative aims to ensure financial services reach even the most remote communities in the North East, fostering economic growth and stability.