Regional Rural Banks and Financial Inclusion: Policy Imperatives
This paper looks at performance, coverage, products, and innovation by Indian regional rural banks (RRBs), especially with regard to financial inclusion and their participation in the Prime Minister’s Jan Dhan Yojana (PMJDY), the Indian government's financial inclusion plan.
The paper is intended to ascertain from the RRB leadership how they see their role in the present and emerging financial architecture, what the outstanding issues are, what kind of support they are receiving and would like to receive from sponsor banks and other government agencies in pursuing their role, and what specific policy suggestions they would like to offer to the Reserve Bank of India and the Government of India towards their effective functioning.
Some of the broad objectives and issues covered in the paper include:
- Pattern of lending for RRBs, i.e. distribution of portfolio including non-performing assets;
- Evaluation of progress made by the RRB under PMJDY with the latest data;
- Assess the readiness and willingness of the existing RRB banking structure for financial inclusion under PMJDY;
- Examples of best practices, and brief documentation of important innovations in financial inclusion undertaken by RRBs;
- Challenges that the RRBs will face once the new generation of small finance banks roll out their operations;
- The technology being used by the RRBs within the banking system and ways of improvement;
- Suggestions to improve the working of RRBs, particularly in the policy sphere.