NEW DELHI, June 7 (PTI): The government today approved Rs 632 crore capital infusion in cash-starved regional rural banks (RRBs) to improve their capital adequacy and lending capacity to the agriculture sector.
“RRBs will get Rs 632 crore from the central government”, said a minister after the meeting of the Cabinet.
Following recommendations of Reserve Bank Deputy Governor K C Chakrabarty, the government had initiated recapitalisation process in 2009-10 for 40 financially weak RRBs, which mainly provide credit to rural and agriculture sectors.
However, till March 2012, capitalisation was done in 16 banks as several states did not provide their contribution.
In order to complete the process of recapitalisation, the Cabinet has decided to extend the scheme by two years.
“The Union Cabinet today approved the release of 50 per cent share of the central government for recapitalisation of the remaining RRBs to improve their capital to risk weighted assets ratio (CRAR),” an official statement said.