Regional rural banks in a spot as states pull out deposits
Various state governments have withdrawn crores of rupees from RRBs, leaving them in distress as they are now deprived of bulk low-cost deposits.
By Atmadip Ray, TNN |
KOLKATA: Regional rural banks (RRBs) have found themselves in a tight spot as state governments have started withdrawing lumpsum deposits from them. Since April this year, various state governments have withdrawn crores of rupees from these banks, leaving them in distress as they are now deprived of bulk low-cost deposits.
RRBs are losing the flow of low-cost funds for their lack of computerisation and technology-driven banking solutions. The majority of the 96 rural banks don’t offer facilities like online banking, anywhere banking or real time gross settlement system.
The Karnakata government has withdrawn around Rs 410 crore from two RRBs in the state. It has recalled Rs 300 crore worth of low-cost deposits from Canara Bank-promoted Pragathi Grameen Bank and another Rs 110 crore from Syndicate Bank-sponsored Karnataka Vikas Grameen Bank.
Uttar Pradesh has withdrawn nearly Rs 100 crore from the Kashi Gomti Samyut Grameen Bank. The Haryana Grameen Bank lost nearly Rs 60 crore of deposits. State government agencies prefer nationalised and private banks.
“RRBs, which lost low-cost government deposits over the past several months, are losing in two ways. First, their costs of funds are getting dearer. Second, bereft of bulk funds, they are losing lending opportunities as well,” All India Regional Rural Bank Employees Association general secretary DK Mukherjee said.
RRBs are losing the flow of low-cost funds for their lack of computerisation and technology-driven banking solutions. The majority of the 96 rural banks don’t offer facilities like online banking, anywhere banking or real time gross settlement system.
The Karnakata government has withdrawn around Rs 410 crore from two RRBs in the state. It has recalled Rs 300 crore worth of low-cost deposits from Canara Bank-promoted Pragathi Grameen Bank and another Rs 110 crore from Syndicate Bank-sponsored Karnataka Vikas Grameen Bank.
Uttar Pradesh has withdrawn nearly Rs 100 crore from the Kashi Gomti Samyut Grameen Bank. The Haryana Grameen Bank lost nearly Rs 60 crore of deposits. State government agencies prefer nationalised and private banks.
“RRBs, which lost low-cost government deposits over the past several months, are losing in two ways. First, their costs of funds are getting dearer. Second, bereft of bulk funds, they are losing lending opportunities as well,” All India Regional Rural Bank Employees Association general secretary DK Mukherjee said.
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