Finance Minister Urges RRBs to Enhance Banking Penetration in MSME Clusters

Finance Minister Nirmala Sitharaman urged Regional Rural Banks (RRBs) to align products with MSME clusters to boost banking penetration. In a review with RRBs and sponsor banks, she emphasized asset quality, digital expansion, and robust governance, urging RRBs to focus on credit for sectors such as textiles and agriculture.

Finance Minister Nirmala Sitharaman on Monday called on Regional Rural Banks (RRBs) to develop suitable products tailored to MSME clusters to expand banking penetration.

In a review meeting with RRB chairpersons and CEOs of their sponsoring banks, Sitharaman stressed the importance of active outreach by RRB branches in MSME clusters, aiming to ensure credit availability for small and micro enterprises in sectors like textile, wooden furniture, and food processing. She highlighted the immense potential for enhancing the loan portfolio through such initiatives.

Sitharaman urged sponsor banks and RRBs to address upcoming challenges while maintaining asset quality, expanding digital services, and ensuring strong corporate governance. She emphasized the need for RRBs to stay technologically updated to remain relevant, particularly in regions with challenging physical connectivity. The sponsor banks play a crucial role by offering technical assistance and sharing best practices to ensure RRBs have the necessary resources for success.

Furthermore, Sitharaman stressed the importance of RRBs in the rural economy, urging them to focus on clearly identifying beneficiaries for loan schemes like PM Vishwakarma and PM Surya Ghar Muft Bijli Yojana. She also directed RRBs to increase their share in ground-level agriculture credit disbursement.

During the meeting, which included Department of Financial Services Secretary-Designate M Nagraju and other senior officials, Sitharaman appreciated the financial improvements and technological upgrades of RRBs since the regular review started in 2022, and she encouraged them to maintain this momentum. RRBs reported a highest-ever net profit of Rs 7,571 crore for 2023-24 and the lowest GNPA ratio in a decade.

(With inputs from agencies.)