Evaluation Of Rrbs – Assessment Past Times Diverse Committees

Friends, hither is our quaternary lesson of Regional Rural Bank series. Please read the origin 3 lessons below earlier reading this. Happy Reading.
The authorities too NABARD periodically set upward diverse study groups too committees to evaluate the performance of the RRBs too brand recommendations to better their performance. We shall nowadays to a greater extent than or less of the of import recommendations. 

  1. The Dantwala Committee (1978) : It suggested that the RRB’s juridiction should hold upward confined to i district. RRBs should hold upward required to furnish sum banking facilities inward the areas of operation. RRBs should hold upward playing only a supporting role to cooperative banks. 
  2. Agricultural Credit Review Committee (ACRC 1989) : The Committee took banking concern annotation fo the serious organizational problems of RRBs on work organisation human relationship of the continuous refuse inward profitability, miserable recoveries too problems relating to management too staff. The Committee noted that major factors which contributed to the erosion of RRBs’ profitability were lending alone to the weaker sections, depression involvement charge per unit of measurement too margins too high operating costs involved inward treatment of pocket-size loans. They did non conduct hold whatever range of cross subsidization inward the absence of loans that could yield higher returns. Wilful defaults, misuse of loans, lack of follow-up, incorrect identification of borrowers, extension fo benami loans, staff agitations etc. also led to miserable recoveries inward RRBs, noted the Committee. The objective of serving the weaker sections effectively could hold upward achieved only past times self-sustaining credit institutions. RRBs structurally are non the institutions that could fulfill this role. The Committee noted that the logic too rationale which justified the setting upward of RRBs did no longer exist. The weakness of the RRBs are endemic to the scheme too non-viability is built into it. The Committee also explored the possibilities of improving enlargement of the portion capital, provision of bad debt reserve, providing larger access to to a greater extent than resilient customers too fifty-fifty giving them a subsidiary condition to the commercial banks. But on closer examination, these alternatives were found to hold upward unsatisfactory as, inward the sentiment of the Committee, the RRBs did non solve the problems of effective service to the rural poor.
  3. Committee on Financial System (Narasimham Committee, 1991) : One of the problems of RRBs is improving their viability without sacrificing the basic objective for which they were set up. To impart viability to the operations of RRBs, they should hold upward permitted to engage inward all type of banking work organisation too should non hold upward forced to bound their operations to the target groups. To better their viability further, a machinery hold upward worked out nether which the RRBs should hold upward able to house their surplus funds with NABARD or with a exceptional means that mightiness hold upward set upward for the purpose which should pay involvement on such balances past times investing or deploying these funds to the best payoff on behalf of RRBs. The solution lies inward evolving a rural banking construction which would combine effectively the payoff of the local grapheme of the RRBs too the strength too the organizational too managerial skills of commercial banks. The postulate is to constitute a feasible banking construction which could effectively run into rural credit needs. The Committee recommended that each populace sector banking concern should set upward i or to a greater extent than rural banking subsidiaries to accept upon its all rural branches. It was left on the RRBs too their sponsored banks equally to whether the RRBs should retain their split upward identity or they should hold upward merged with such rural subsidiaries. 
  4. Committee on Restructuring of RRBs (Bhandari Committee 1994) : Apart from identifying 49 RRBs for comprehensive restructuring, the commission made broad ranging recommendations relating, inter alia, to the engagement of Chairman / CEO, delineation of roles too responsibilities of supervising agencies of RRBs, staff matters, improving returns on SLR nd non-SLR investments too improving funds management, augmentation of portion capital, expansion of the range of work organisation avenues, deregulation of involvement rates too rationalization of branch licensing policy.
  5. Committee on Revamping of RRBs (Basu Committee, 1996) : Apart from identifying 68 RRBs for-restructuring nether Second Phase, Basu Committee made for sure recommendations on operational matters equally well. Most of import alongside them are,
    • Introduction of Prudential Norms for RRBs with a suitable modifications.
    • Need to redefine the role of shareholders of RRBs to a greater extent than precisely.
  6. Committee on Banking Sector Reforms (Narasimham Committee, 1998) : Banking scheme should hold upward inward a seat to set a credit civilization too champaign of study past times equipping itself to seat the eligible clients, based on the prescribed norms, inward the authorities sponsored schemes hence that sum responsibleness for all aspects of credit decisions remains with it. This would also aid better the client-bank human relationship instead of the nowadays scheme of nearly imposed clientele. The supervisory functions over rural fiscal institutions conduct hold been entrusted to NABARD. While this organisation may choke on for the present, over the longer term the Committee suggested that all regulatory too supervisory functions over rural credit institutions should vest with the Board for Financial Regulation too Supervision. RRBs must rationalize too amend their loan policies too procedures hence equally to business office equally a evolution banker for the rural poor. RRBs must piece of work inward closed coordination with the cooperative banks too rural branches of commercial banks to create sum the credit gap inward rural areas without whatever clash of usual interests. 
  7. The Estimates Committee of Parliament of the Ministry of Finance, inward its 16th study submitted to the Lok Sabha inward Apr 2003, made the next primary observations / recommendations on which NABARD advised RRBs to initiate suitable corrective / followup activeness too review the actions inward their Board meetings. 
    1. Interest on agricultural advances should non hold upward compounded.
    2. CD ratio should hold upward stepped upward past times concentrating to a greater extent than on lending than on investments. 
    3. Proper too split upward tape of lendings to pocket-size too marginal farmers should hold upward maintained.
    4. Concrete steps conduct hold to hold upward initiated to better their recovery performance. 
    5. RRBs which create non adhere to guidelines conduct hold to hold upward dealt with severely.
    6. Internal systems too procedures too command measures to elevate effectiveness inward sanctioning loans too advances too a scheme of post service disbursement should hold upward evolved.
    7. RRBs inward consultation with their sponsor banks conduct hold to depict fourth dimension jump perspective preparation plans to embrace all their staff.
    8. Number of cases related to fraud / misappropriation of funds, conduct hold to hold upward identified too activeness taken. 
  8. Chalapathy Rao Committee Government of India, June 2002 : With emphasis forthwith set past times authorities of Republic of Republic of India inward the entire arrive at of fiscal services to hold upward provided past times RRBs that is necessary for the evolution of rural economic scheme equally a whole, at that topographic point is postulate for widening the range of their activities. Some of the of import recommendations are :
    1. In the physical care for of strengthening the RRBs to shoulder greater responsibilities inward rral economy, emphasis is placed on alter of ownership blueprint of RRBs. The nowadays ownership blueprint i.e., 50:15:35 betwixt primal government, state authorities too sponsor bank, is also rigit. In enterprise to enable RRBs to stand upward on their ain feet, blueprint of ownership needs to hold upward to a greater extent than flexible to enable the salubrious RRBs access to majuscule markets. For the purpose of deciding the ownership blueprint RRBs may hold upward categorized into categories A, B, C & D depending upon their net income making abilities. 
    2. Area of functioning of RRBs may hold upward extended to embrace all districts hither to uncovered past times the services of RRBs. It must hold upward ensured that every socio-economic zone must conduct hold a potent too feasible RRB. 
    3. Capital adequacy norms may hold upward introduced for RRBs inward a phased manner.
    4. Regulatory frame piece of work for RRBs must hold upward on the lines of those for commercial banks with provisions for banking concern specific relaxation equally may hold upward necessary for a specific fourth dimension period. RRBs may also hold upward subjected to statutory norms of licensing too each RRB should hold upward required to obtain license from RBI nether the Banking Regulation Act, 1949.
    5. Self-supervisory scheme shuold hold upward introduced to better adherence to statutory too regulatory requirements, too internal policy guide lines, functioning on conduct chances management too assets liability management systems, transparency disclosures too diverse internal command measures.
    6. In enterprise to strengthen the RRBs to cater to the needs of the rural economic scheme for all kinds of fiscal services, diversification of their work organisation has to hold upward encouraged without losing focus on fulfilling fiscal needs of the rural poor. They may hold upward encouraged to develop their ain client segment specific products for deposits, term-investments, loans.
    7. In melody with the changing environs too ascent client preference for technology driven services inward banks, fifty-fifty inward rural areas to a greater extent than or less of the RRBs may required to innovate automated services similar multi-service credit / debit cards, smart cards, automated missive of the alphabet machines, affect enshroud services etc., at to the lowest degree inward selected major branches. 
    8. RRBs may hold upward restructured on a 3 tier basis, consisting of caput office, a district business office / branches, too rural branches. Head offices should hold upward concerned only with corporate policy too strategy, management of resources, institutional evolution district offices should hold upward preoccupied with champaign piece of work too rural branches with lending too recovery. 

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