KOLKATA: The Reserve Bank of India on Wednesday said about Rs 1,800 crore would be required to strengthen the balance sheet of Regional Rural Banks (RRBs), even as the regulator acts to revive Urban Co-operative Banks (UCBs).
"There are 96 RRBs in the country and only some require recapitalisation. Total estimated amount would be Rs 1,800 crore for recapitalisation," RBI Deputy Governor Usha Thorat said here at a state-level banking meet.
"The RRB board should decide on capital infusion. Recapitalisation is needed though they are growing through normal profit," Thorat said.
She, however, did not clarify whether RBI would make RRBs' recapitalisation mandatory.
In West Bengal, three RRBs would require Rs 320 crore. The Centre would need to infuse Rs 50 crore into the capital of these banks in order to support the process, Thorat said.
The role of RRBs was significant in achieving financial inclusion and RBI was keen to spread financial literacy to help this process.
"We are ready to provide content, information booklets, CDs, but this should be distributed by state authorities and should also be incorporated in the school curriculum," Thorat said.
Speaking on UCBs, Thorat said the regulator might wind up banks which could not be revived or merged.
"We will classify weak UCBs on a case-by-case basis and it will be seen whether they can be strengthened, merged and fresh funds infused," Thorat said.
"UCBs are usually small with dual controlled by registrars of cooperative societies and RBI. There are various reasons for their weakness and poor governance. This needs to be addressed. We have already initiated the process," she said.
There are about 1,800 UCBs in the country and RBI has signed MoU with 13 state governments for better regulatory and strengthening process.
Thorat, while acknowledging the need for better credit flow to the SME sector, called for specific products and improvement in the situation.
West Bengal Finance Minister Asim Dasgupta urged bankers to target financial inclusion in each district of the state by the end of the 11th Plan.
