The Cabinet Committee on Economic Affairs (CCEA) has approved recapitalization of those Regional Rural Banks (RRBs) which are unable to maintain minimum Capital to Risk weighted Assets Ratio (CRAR) of 9%, as per the regulatory norms prescribed by the Reserve Bank of India.
Consequent upon RBI’s decision to introduce disclosure norms for Capital to Risk Weighted Assets Ratio (CRAR) of RRBs with effect from March 2008, a committee was set up under the Chairmanship of Dr. K.C. Chakrabarty.
Based on the Committee’s recommendations, a Scheme for Recapitalization of RRBs was approved by the Cabinet in 2011.
Based on the CRAR position of RRBs, as on 31st March of every year, National Bank for Agriculture and Rural Development (NABARD) identifies those RRBs, which require recapitalisation assistance to maintain the mandatory CRAR of 9%.
Important Info :
Government has initiated structural consolidation of RRBs in three phase, thereby reducing the number of RRBs from 196 in 2005 to the present 45.
As per RBI guidelines, the RRBs have to provide 75% of their total credit under PSL (Priority Sector Lending).