%0 Journal Article
%T A Financial Performance Analysis of RRBs: Pre and Post Transformation
%A Dr. Ishwara. P
%J International Journal of Economics and Research
%D 2011
%I Sanben Agency
%X In this paper an attempt has been made to study the performance of the RRBs since 1980 to 2009. In order to know the implications of transformation of RRBs in 2004, the study focuses financial results before and after amalgamation. RRBs were established ¡°with a view to developing the rural economy by providing, for the purpose of development of agriculture, trade, commerce, industry and other productive activities in the rural areas, credit and other facilities, particularly to small and marginal farmers, agricultural laborers, artisans and small entrepreneurs, and for matters connected therewith and incidental thereto¡±(RRBs Act, 1976). RRBs alone have organized roughly 12 lakh self-help groups, 45 per cent of the total self-help groups in the country. RRBs have also issued over 40 lakh Kisan Credit Cards to the farmers and organized over 5,000 out of 11,000 farmers¡¯ clubs under NABARD scheme. Though the growth in credit when seen in isolation gives an impression of the impressive strides made by RRBs in disbursing credit, they account for a very small proportion (around 3 per cent) of the total assets of the Indian banking sector, despite their significant branch network. While C-D ratio for 50 RRBs was more than 60 per cent that for 87 banks was less than 40 per cent in March 2004. The Government of India (Ministry of Finance) issued notifications on September 12, 2005 for amalgamation of 28 RRBs into nine new RRBs sponsored by nine banks in six States. These amalgamations have become effective from September 12, 2005. After amalgamation, RRBs transformation has resulted in a 200 per cent increase in net profits, a 100 per cent increase in business, a gradual reduction in the number of loss-making banks and addition of 1,000 outlets. All this has been because of consolidation among RRBs. The Central government initiated the process of amalgamating RRBs in September, 2005. Then there were 196 RRBs. The study reveals that, RRBs seem to have better Non-Performing Assets (NPA) management with net NPA coming down every year after the amalgamation. In 2005-06, the net NPA stood at 3.96 per cent. It declined to 1.98 per in 2008-09. RRBs are extending loans to non-agricultural sector in rural areas also. They are broad-basing their credit pattern. Malaprabha Grameen Bank went ahead to finance vehicles for rural transport system. Financing of vehicles for rural transportation helped villagers, as they sold their produce in urban areas. The reduction in number of RRBs has not resulted in any sudden reduction in staff strength since there was no termination of s
%K Pre and Post Transformation
%U http://www.ijeronline.com/documents/volumes/vol2issue1/ijer20110201(13).pdf