NEW DELHI: The Central government on Wednesday approved Rs 1,340 crore recapitalisation plan to help the Regional Rural Banks (RRBs) meet regulatory capital requirements for the next financial year, so that they continue to provide credit to farmers, small scale industries, rural artisans and entrepreneurs hit by the coronavirus outbreak.
"The Cabinet Committee on Economic Affairs (CCEA) approved utilisation of Rs 670 crore as the Central government share for the scheme of recapitalisation of RRBs (i.e. 50 per cent of the total recapitalisation support of Rs 1,340 crore),subject to the condition that the release of Central government’s share will be contingent upon the release of the proportionate share by the sponsor banks," said an official statement released after the meeting chaired by the Prime Minister.
RRBs primarily cater to the credit and banking requirements of agriculture sector and rural areas with a focus on small and marginal farmers, micro and small enterprises, rural artisans and weaker sections of the society.
The Reserve Bank of India (RBI) guidelines prescribes that the RRBs have to provide 75 per cent of their total credit under priority sector lending. The capital will be used for those RRBs that are unable to maintain minimum Capital to Risk weighted Assets Ratio (CRAR) of 9 per cent, as per the regulatory norms prescribed by the Reserve Bank.
As per the law, the Centre holds 50 per cent stake in Regional Rural Banks, while 35 per cent and 15 per cent shares are with the concerned sponsor banks and state governments respectively.
The Cabinet has also approved extension of scheme for Rebate of State and Central Taxes and Levies on Export of Garments and Made-ups from April 1 onwards till the scheme is merged with Remission of Duties and Taxes on Exported Products. This will give some relief to the exporters, who are badly hit by the coronavirus outbreak.
Centre to share 50 per cent burden
Rs 1.340 crore approved to help RRBs meet regulatory capital requirements next fiscal
Rs 670 crore approved as the Centre’s share for the RRB recapitalisation scheme