A Study on Performance Evaluation of Regional Rural Banks (RRBs) in India (International Journal of Advanced Research in Commerce Management & Social Science)

Summary

• Aggregate deposits of RRBs increased from Rs. 4,34,444 crore in 2019 to Rs. 4,78,547 crore in 2020.p.4
• Gross loans and advances of RRBs expanded from Rs. 2,80,755 crore in 2019 to Rs. 2,98,256 crore in 2020.p.4
• The aggregate Net Loss of RRBs increased from Rs. 652 crore in 2019 to Rs. 2,206 crore in 2020.p.4
• Gross Non Performing Assets (NPA) of RRBs slightly declined from 10.8% in 2019 to 10.4% in 2020 as a percentage of loans outstanding.p.5
• System-wide CRAR of RRBs decreased from 11.5% as on 31 March 2019 to 10.2% as on 31 March 2020.p.6

Key insights

1. Initial establishment of RRBs began on October 2, 1975, following the recommendations of the Narasimham committee.p.2
2. During FY 2019-20, 26 RRBs earned profit of Rs. 2,203 crore while 19 RRBs incurred losses of Rs. 4,409 crore.p.4
3. The profitability of RRBs measured in Return on Assets (%) deteriorated from -0.13% in 2018-19 to -0.40% in 2019-20.p.4
4. The recapitalization scheme of RRBs was extended up to 2020-21 to help maintain a minimum prescribed CRAR of 9%.p.5
5. RRBs achieved business growth of 8.6% in financial year 2019-20 compared to 9.5% in the previous year.p.6
6. As of 31st March 2020, 17 out of 45 RRBs had CRAR lower than 9%, including 6 RRBs with negative CRAR (%).p.6