100 Crore For RRBs

In order to improve financial level of the two Regional Rural Banks(RRB)s, Odisha Government will have to provide over Rs.100 Crore during this Financial Year.

And more funds will be pumped to both RRBs for next four years, official sources said.

RRBs are jointly funded by Union Government, State Government and Sponsor Banks.

Utkal Gramin Bank and Odisha Gramya Bank are operating in Odisha and both these RRBs are required recapitalization assistance from both Union Government and State Government.

UGB is sponsored by State Bank of India (SBI) and OGB is sponsored by Indian Overseas Bank (IOB).

While UGB is operating in 17 districts, OGB has 13 districts as area of operations.

With the Supreme Court of India in its Judgment has directed Government of India to grant pension to the employees of the RRBs like Nationalized Banks, pumping of more funds are needed.

NABARD has assessed the recapitalization assistance to be given to both RRBs and accordingly both Centre and State will have to provide the assistance, said sources in Department of Finance.

Now with Supreme Court Judgment for providing pension to the employees, RRBs require more funds for improving their Balance Sheet.

NABARD has made assessment looking at the Pension liability for next five years on both RRBs. According to assessment made by NABARD financial support of next five years to both the RRBs will be of the order of Rs.1961.37 Crore.

While Utkal Gramin Bank (UGB) requires Rs.1076.23 Crore, Odisha Gramya Bank (OGB) needs Rs.885.14 Crore for recapitalization during next five years.

Out of these amounts, Union Government will bear 50 Percent and State Government will have to share 15 Percent, sources said, adding the Sponsor Bank will bear 35 Percent.

As per Reserve Bank of India Guidelines, it is mandatory for RRBs to meet regulatory requirement of Capital to Risk Weighted Asset Ratio (CRAR) of 9 Percent.

On the CRAR position of RRBs on 31 March every year, NABARD used to identify those RRBs, which requires recapitalization assistance to maintain CRAR of 9 Percent.

Recapitalization assistance is estimated for 2020-21 to 2023-24, which may change on the financial results of RRBs in subsequent years.

NABARD will make assessment after 31 March 2020 on the basis of financial results.

So for the Fiscal 2019-20 it has been estimated that Rs.729.07 Crore is required for recapitalization of both the RRBs.

While UGB requires Rs.508.74 Crore, OGB needs Rs.220.83 Crore of which Union Government will bear Rs.364.53 Crore and Sponsor Banks will bear Rs.255.18 Crore.

And the State Government will have to provide Rs.109.36 Crore during 2019-20 towards its share, officials said.

From 2020-21 to 2023-24 there will be fresh assessment and accordingly the State Government will have to fund the amount, said sources.

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