PHOTO: S. SUBRAMANIUM

RURAL FOCUS: Union Finance Minister P. Chidambaram with Deputy Governor, RBI, Usha Thorat, at a meeting to review the performance of regional rural banks in New Delhi on Thursday.

NEW DELHI: Ruling out the merger of regional rural banks (RRBs) with their sponsoring parent banks, Finance Minister P. Chidambaram on Thursday declared that the process of consolidation within the RRBs would continue along with an "aggressive" branch expansion programme.

Briefing newspersons here after a review meeting on the performance of RRBs, Mr Chidambaram said there were no proposals for mergers and the banks would continue to operate under their sponsor parents. "Consolidation will take place among RRBs... a few more [consolidation] will happen and the final number will be 96. At present, there are 102 RRBs. It will happen in [the] next five months," he said.

With regard to expansion of bank branches, Mr. Chidambaram said: "We will aggressively pursue the branch expansion programme for RRBs in calendar 2007.'' As on March 31, 2006, the total number of RRB branches across the country stood at 14,494.

Satisfied with the performance of RRBs — having witnessed deposit and advances growth rates of 12 per cent and 21 per cent, respectively — Mr. Chidambaram said further growth opportunities were infinite in view of the increased demand for rural credit. However, there were still 40 RRBs with negative net worth.

"They will continue to have Government attention. We have asked for their suggestions we will examine them and fix their problem," he said.

Explaining why the Government was laying stress on these banks, the Finance Minister noted that the RRBs were major instruments of financial inclusion as they provided credit to farmers, artisans and rural traders.

The performance review meeting, Mr Chidambaram said, was the first ever on RRBs.

With the process of consolidation and amalgamation launched in 2005, the number of RRBs stood reduced from 196 to 133 as on March 31, 2006, and further 102 till date.

According to official data on RRBs for the last three years, their total business increased from Rs. 82,463.94 crore in 2003-04 to Rs. 1,11,041.40 crore in 2005-06. The disbursal of farm loans also doubled from Rs. 7,174.97 crore in 2003-04 to Rs. 15,298.88 crore in 2005-06.

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