The Modi government has provided Rs 6212.03 crore to Regional Rural Banks under the recapitalization scheme as of March 6.

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Regional Rural Banks (RRBs) are commercial banks owned by the Indian government that operate at the regional level in different states. RRBs were established in 1975 to provide basic banking and financial services to rural areas, particularly to small and marginal farmers, agricultural laborers, artisans, and small entrepreneurs.

The performance of RRBs has improved significantly, with a consolidated CRAR (Capital to Risk-weighted Assets Ratio) at an all-time high of 13.83 per cent as of December 31, 2023.

Under the scheme, recapitalization support is provided to RRBs to maintain the minimum prescribed capital-to-risk (Weighted) Assets ratio of nine per cent.

Indian RRBs have shown the highest ever consolidated net profit of Rs 4,974 crores in FY22-23 and a net profit of Rs 5,236 crore up to the 3rd quarter of FY 2023-24.

Similarly, the credit expansion has led to an increase in the consolidated credit-deposit ratio to 72.13 per cent as of 30.09.2023, which is the highest in the last 15 years.

This comes against a backdrop of a 3-year board-approved viability plan (VP) in the financial year 2022-23, with a well-defined implementation mechanism aimed at achieving sustainable viability
RRBs are vital for banking and financial services to rural communities, agriculture activities and small businesses.

There are 43 RRBs sponsored by 12 scheduled commercial banks in India.