MSME credit in rural areas: Union Finance Minister Nirmala Sitharaman has asked banks to map regional rural banks (RRBs) with MSME clusters and also put greater thrust on increasing the network of rural branches in cluster areas identified by the MSME Ministry. Sitharaman on Wednesday chaired a review meeting of RRBs of Northern Region in New Delhi.
RRBs are scheduled commercial banks operating at regional levels in the country to enable banking and credit services for agriculture and other rural sectors. However, they may have a network for urban operations also. The nationalised banks are sponsor banks of RRBs to aid and assist them.
Some of the RRBs operating, for example, are Andhra Pradesh Grameena Vikas Bank (sponsor bank SBI), Bangiya Gramin Vikash Bank (sponsor bank Punjab National Bank), J&K Grameen Bank (J&K Bank), Kerala Gramin Bank (Canara Bank), Telangana Grameena Bank (SBI), according to the list of RRBs in India by the Department of Financial Services. The sponsor banks hold a 35 per cent share in RRBs.
The finance minister also emphasised increasing penetration under Pradhan Mantri Mudra Yojana (PMMY) and financial inclusion and stated that a roadmap has to be prepared for completing the designated activities in a timebound manner, said a statement by the finance ministry.
Launched in 2015, the Mudra scheme refinances last-mile financiers who provide credit to micro and small enterprises in manufacturing, trading and services activities as well as agri-allied activities. The scheme enables credit at three different growth stages — Shishu, Kishor, and Tarun with financial limits up to Rs 50,000; Rs 50,00 to Rs 5 lakh; and Rs 5 lakh to Rs 10 lakh respectively.
In FY23, Rs 4.56 lakh crore was sanctioned under 6.2 crore Mudra loans to MSEs while in FY22, Rs 3.39 lakh crore was sanctioned under 5.3 crore loans. In FY21, Rs 3.21 lakh crore was sanctioned under 5 crore loans while pre-Covid, during FY20, Rs 3.37 lakh crore was sanctioned under 6.2 crore loans.
According to the government data, the total non-performing assets (NPAs) as a percentage of credit disbursed under the Mudra scheme as of March 31, 2023, was 2.62 per cent (provisional).