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RRBs net profit up 15% despite higher provisioning

Regional Rural Banks (RRBs) in the country witnessed a growth of 15 per cent in net profit during 2016-17 in spite of an increase in provisioning due to higher NPAs (non-performing assets).

According to the RBI’s (Reserve Bank of India) report on ‘Trend and Progress of Banking in India’ for 2016-17, as many as 56 RRBs operating in the country recorded a net profit of ₹2,300 crore during 2016-17 against ₹2,000 crore in 2015-16.

The report attributed the growth in net profit to increase in both net interest income and other income coupled with a decline in operating expenses. Net interest income (NII) stood at ₹16,000 crore (₹11,600 crore), and other income at ₹3,600 crore (₹2,100 crore) during the period.

Provisions and contingencies increased from ₹2,100 crore to ₹4,200 crore during the period. Gross NPAs (non-performing assets) of these banks stood at 8.1 per cent (6.8 per cent) during the period. Loans and advances of RRBs increased to ₹2.23 lakh crore during 2016-17 against ₹1.95 lakh crore in the previous fiscal.

Outstanding advances in priority sector stood at ₹1.93 lakh crore (₹1.77 lakh crore). Of this, the share of agriculture advances stood at ₹1.44 lakh crore (₹1.31 lakh crore). The report noted that current and saving deposits increased by 20 per cent or more, partly reflecting the impact of demonetisation.

Current deposits stood at ₹10,700 crore (₹8,900 crore), and savings deposits at ₹1.88 lakh crore (₹1.48 lakh crore) during the year. The number of RRBs operating in the country has come down to 56 as at end-March 2017 from 196 in 2005 through amalgamation and consolidation of existing RRBs to improve their financial performance and soundness.

The report said that many RRBs have been recapitalised by the Government intermittently to meet the minimum 9 per cent CRAR in a sustainable manner and also to enable them to extend more credit to productive sectors.

(Source: The Hindu Business Line)

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