- Expansion of RRBs was uneven inward the country. As already observed inward around states similar U.P, Bihar, Madhya Pradesh as well as Andhra Pradesh had a higher proportion of RRBs operating. About 55 percent of all the branches of RRBs are situated inward these states.
- Accumulated Losses : RRB recovery charge per unit of measurement was really poor. Most RRBs had mounting over dues. They had losses accumulated due to bad debts. Total number of accumulated losses every bit on 31st March 2014 are Rs. 1012 crore (However, this sum was Rs. 2752.25 inward 2003 as well as 1532 inward 2011).
- Many RRBs were non feasible : They are financially weak, as well as their book of describe concern is small. Their average lending charge per unit of measurement is almost xi percent. Higher toll of direction is partly due to their depression book of business. Viability status of RRBs is non uniform. A viability based review of RRBs shows that loss incurring RRBs are concentrated inward iv states namely Bihar, Orissa, Madhya Pradesh as well as Rajasthan. The Government should accept around effective remedial steps to brand Rural Banks viable.
- RRBs endure from problems similar express expanse of operation narrow banking preference, depression degree of recovery inward for certain regions, difficulty inward effecting recoveries nether authorities sponsored programmes, HRD related issues etc.
- Non-Performing Assets are around other major expanse of concern. 10 RRBs had gross NPA per centum of less than 2%, whereas 32 RRBs had it inward a higher house 5%. At the all Republic of Republic of India degree per centum of NPAs is 14.44. However, at that spot are broad variations betwixt regions. It was every bit high every bit 79.02% inward Arunachal Pradesh as well as every bit depression every bit 4.36% inward Tamil Nadu.
- Quality of Lending was poor : Small borrowers had difficulty inward agreement as well as fulfilling the procedural formalities that were many. Follow upwards supervision as well as monitoring the usage loans were inadequate. This besides contributed to the occupation of over dues. Frequent floods as well as drought weather condition aggravate the problem.
- Various types of Interest Rates prevailing by multiple credit institutions operating simultaniously created problems
- Shared ownership : Capital of the RRBs was contributed yesteryear the Central, State Governments every bit good every bit the sponsoring banks. Shared ownership has resulted inward multiple controls over the RRBs. RRBs were non properly managed. The boards of RRBs did non accept much involvement inward the affairs of the banks. Nominations of the directors to the boards was oftentimes made on political considerations.