Passing of Regional Rural Banks (Amendment) Bill 2014
NEW DELHI: Wansuk Syiem, the lone Rajya Sabha MP from Meghalaya on Wednesday came down heavily on the BJP-led NDA Government for passing the Regional Rural Banks (Amendment) Bill, 2014 which she said will affect the rural poor especially the grossly underbanked populace of the Northeastern states.
“The amended bill which was passed with “orchestrated majority” will hit the interest of the marginal farmers, agricultural labourers, rural artisans and small entrepreneurs,” Wansuk said in her Special Mention in the Upper House.
“Interest of such weaker sections of the society who form the backbone of the rural economy seemed to have been mortgaged by the Centre to suit the interest of the private sector,” she alleged.
Among other things, the Bill increases the minimum tenure of a director on the board of a regional rural bank and allows the Central Government to appoint an official to the board of a regional rural bank. The Bill was passed by Lok Sabha during the Winter Session last year.
“Regional rural banks are local level banking organizations operating in different States created with a view to serve primarily the rural areas of India with basic banking and financial services,” Wansuk said.
“It was the Congress party which in the nineties expanded the RRB branches to far flung and remote areas like North East,” she added.
“The main purpose of the RRB’s is to mobilize financial resources from rural/semi-urban areas and grant loans and advances mostly to small and marginal farmers, agricultural labourers and rural artisans. Providing banking facilities to rural and semi-urban areas, carrying out government operations like disbursement of wages of MGNREGA workers, distribution of pensions besides basic para banking functions are also carried out by such small village banks,” she added.
Digging into the past Wansuk said RRBs were established under RRB Act 1976 to provide sufficient banking and credit facility for agriculture and other rural sectors. These were set up during the tenure of Indira Gandhi’s government with a view to include rural areas into economic mainstream since that time about 70% of the Indian Population was of Rural Orientation.
Subsequent to review of the financial status of RRBs by the Union Finance Minister in 2009, it was felt that a large number of RRBs had a low capital to risk weighted assets ratio (CRAR). A committee was constituted in 2009 under the Chairmanship of K C Chakrabarty, Deputy Governor, RBI to analyse the financials of the RRBs and to suggest measures including re-capitalisation to bring the CRAR of RRBs to at least 9% in a sustainable manner by 2012.
The Committee had recommended additional amount of Rs. 700 crore as contingency fund to meet the requirement of the weak RRBs, particularly those in the North Eastern and Eastern region. The committee had recommended for financial Sector plan for Northeastern Region, Empowerment of the Board of RRBs, attention to educated unemployed, Recruitment and training, which the M.P felt was not enough.