Recently, the Centre has approved a Rs. 1340-crore recapitalisation plan for Regional Rural Banks (RRBs).The move is crucial to ensure liquidity in rural areas during the lockdown due to the COVID-19 crisis.
This recapitalisation would improve their capital-to-risk weighted assets ratio (CRAR) and strengthen these institutions for providing credit in rural areas.The step will help those RRBs which are unable to maintain a minimum CRAR of 9%, as per the regulatory norms prescribed by the RBI.
The release of the Rs. 670 crore as the central share funds will be contingent upon the release of the proportionate share by the sponsor banks.
The recapitalisation process of RRBs was approved by the cabinet in 2011 based on the recommendations of a committee set up under the Chairmanship of K C Chakrabarty.
The National Bank for Agriculture and Rural Development (NABARD) identifies those RRBs, which require recapitalisation assistance to maintain the mandatory CRAR of 9% based on the CRAR position of RRBs, as on 31st March of every year.
The scheme for recapitalization of RRBs was extended up to 2019-20 in a phased manner post 2011.
The Regional Rural Banks are established on the recommendations of which Committee ?
P.J Nayak Committee
Incorrect AnswerUsha Thorat Committee
Incorrect AnswerNarasimham Committee
Correct AnswerNachiket Mor Committee
Incorrect AnswerNandan Nilekani Committee
Incorrect AnswerExplanation:
The Narasimham committee on rural credit recommended the establishment of Regional Rural Banks (RRBs) on the ground that they would be much better suited than the commercial banks or co-operative banks in meeting the needs of rural areas. Accepting the recommendations of the Narasimham committee, the government passed the Regional Rural Banks Act, 1976. A significant development in the field of banking during 1976 was the establishment of 19 Regional Rural Banks (RRBs) under the Regional Rural Banks Act‚1976.
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By: Himani Bihagra