The Reserve Bank of India said it would constitute a working group for preparing a road-map for migration to core banking solutions (CBS) by regional rural banks (RRBs). The apex bank asked regional rural banks (RRBs) and state/central cooperative banks to disclose their capital-to-risk weighted assets ratio (CRAR) as on March 31, 2008 in their balance sheets.
The mid-term review of annual policy statement for the year 2007-08, which was released by the governor of Reserve bank of India, YV Reddy in Mumbai on Tuesday, says that ?in order to prepare RRBs to adopt appropriate technology and migrate to core banking solutions for better customer services, it is proposed to constitute a working group with representatives from the Reserve bank, the Nabard, sponsor banks and RRBs for preparing a road-map for migration to core banking solutions by RRBs.?
The government of India had initiated the process of state-level sponsor bank-wise amalgamation of RRBs in September, 2005 in order to strengthen them. Consequent upon amalgamation of 147 RRBs into 46 new RRBs sponsored by 18 banks in 17 states, the total number of RRBs was reduced from 196 to 95. The internal working group on RRBs, headed by AV Sardesai, had recommended that RRBs may be advised to maintain a minimum level of capital to risk-weighted assets ratio (CRAR) which would be progressively raised to the current level of CRAR as per the Basel I norms. At present, capital adequacy norms are not prescribed for RRBs and state/central cooperative banks. It is proposed that RRBs and State/central cooperative banks should disclose the level of CRAR as on March 31, 2008 in their balance sheets. Also, a road-map may be evolved for achieving the desired level of CRAR by these banks.
Based on the recommendations of the working group, which was formed under the chairmanship of SS Johl, an Agricultural Loans (Distressed Farmers) Guarantee scheme, 2007 has been drafted and forwarded to the government of India. The scheme is being revised based on the government?s comments.
The report of the technical group, headed by SC Gupta, which was set up to review the efficacy of the existing legislative framework governing money lending and its enforcement machinery in different states, has been forwarded to State governments for consideration.
Consequent upon announcement made in the annual policy statement of April, 2007, all state-level bankers committee (SLBC) convener banks were advised on May 8, 2007 to review their institutional arrangements for delivering credit to the small and medium enterprises (SME) sector, especially in 388 clusters identified by the United Nations Industrial Development Organisation (UNIDO) spread over 21 states in various parts of the country. In order to study the recommendations made by Dr Arjun K Sengupta, who is the chairman of National Commission for Enterprises in the Unorganised Sector, and suggest the way forward, it is proposed to constitute a working group to study various recommendations of the report of the committee and to suggest an appropriate action plan for implementation of acceptable recommendations.
The group would submit its report within a month. Also, a working group has been constituted under the chairmanship of KC Chakrabarty with representatives from banks and SIDBI to examine the feasibility of bringing in additional capital through alternative routes such as equity participation and venture financing and suggest remedial measures for those potentially viable sick units which can be rehabilitated at the earliest. The group is expected to submit its report by December.