Finance Minister Nirmala Sitharaman Urges Rural Banks to Support Small Businesses
Union Finance Minister Nirmala Sitharaman has called on Regional Rural Banks (RRBs) to ensure easy credit access for Micro, Small, and Medium Enterprises (MSMEs). She emphasized the need for RRBs to become more customer-friendly and leverage their local connections to improve performance.
During a meeting in Udaipur, Sitharaman reviewed the performance of nine RRBs from Gujarat, Maharashtra, Madhya Pradesh, Chhattisgarh, and Rajasthan. The meeting focused on business performance, digital technology upgrades, business growth in MSME clusters, and financial inclusion in rural areas.
Sitharaman highlighted the challenges ahead, including maintaining asset quality, expanding digital services, and ensuring robust corporate governance. She noted the lower uptake of the MUDRA scheme in the Bundelkhand region and directed the State Level Bankers’ Committee (SLBC) to work with state officials, Sponsor Banks, and RRBs to improve the scheme’s performance.
RRBs were also directed to identify potential trades under the PM Vishwakarma scheme and increase their share in ground-level agriculture credit disbursement. Sitharaman acknowledged the satisfactory improvement in technology upgrades of the nine RRBs since 2022 and urged them to continue this momentum.
The Finance Minister also directed RRBs to leverage their healthy CASA ratio to disseminate more credit and called for RBI intervention to resolve pending dues from state governments. The Consolidated Capital to Risk (Weighted) Assets Ratio (CRAR) of RRBs has increased from 7.8% in FY 2021 to 13.7% in FY 2024, with profitability improving from losses of Rs. 41 crores in FY 2021 to a net profit of Rs. 2,018 crore in FY 2024, and Gross Non-Performing Assets (GNPA) at a relatively low ratio of 3.9%.
Doubts Revealed
Finance Minister -: The Finance Minister is a person in the government who is responsible for managing the country’s money and finances. In India, this person is Nirmala Sitharaman.
Nirmala Sitharaman -: Nirmala Sitharaman is an important leader in India who takes care of the country’s money matters. She is the Finance Minister of India.
Rural Banks -: Rural Banks, also known as Regional Rural Banks (RRBs), are banks that help people in villages and small towns by giving them loans and other financial services.
Small Businesses -: Small businesses are companies that are not very big and usually have fewer employees. They can be shops, small factories, or service providers.
Credit -: Credit means borrowing money from a bank or financial institution that you promise to pay back later. It helps people and businesses buy things or grow their work.
MSMEs -: MSMEs stands for Micro, Small, and Medium Enterprises. These are small and medium-sized businesses that are very important for the economy because they create jobs and produce goods.
Customer Service -: Customer service is the help and support that banks and businesses give to their customers. It includes answering questions, solving problems, and making sure customers are happy.
Udaipur -: Udaipur is a city in the Indian state of Rajasthan. It is known for its beautiful lakes and palaces.
Asset Quality -: Asset quality refers to how good or bad the loans and investments of a bank are. Good asset quality means the bank is likely to get its money back.
Digital Services -: Digital services are services provided through the internet or electronic devices, like online banking or mobile apps.
Corporate Governance -: Corporate governance is the way a company or bank is managed and controlled. It includes rules and practices to make sure the company is run well and fairly.
Financial Inclusion Schemes -: Financial inclusion schemes are plans by the government to make sure everyone, especially poor people, can use banking and financial services.
Agriculture Credit -: Agriculture credit is money that banks lend to farmers to help them grow crops and take care of their farms.
