FM meets heads of PSU banks; urges them to ensure credit flow to KCC holders

File image of FM Nirmala Sitharaman.

Finance Minister Nirmala Sitharaman on Thursday urged public sector banks to ensure smooth flow of credit to Kisan Credit Card (KCC) holders to boost rural incomes.

During the half-day long meeting with the CEOs of public sector banks, she also asked them to help Regional Rural Banks (RRBs) in technology improvement.

After the meeting, Minister of Fisheries, Animal Husbandry and Dairying Parshottam Rupala said the finance minister reviewed the Kisan Credit Card (KCC) scheme and discussed how institutional credit can be made available to the segment.

"The meeting was presided over by the finance minister and the issuance of Kisan Credit Card to all those engaged in fishing and dairying sector was discussed. In another session on Regional Rural Banks, it was decided that the sponsor bank should help them in digitalisation and technology improvement," Minister of State for Finance Bhagwat K Karad said.

RRBs, which play an important role in agriculture credit, are sponsored by public sector banks (PSBs). Currently, the Centre holds 50 per cent in RRBs, while 35 per cent and 15 per cent are with the concerned sponsor banks and state governments, respectively. Of the 43 RRBs, about one-third, especially from north-eastern and eastern regions, are in losses and they need funds to meet regulatory capital requirements of 9 per cent, sources said.

These banks were formed under the RRB Act, 1976 with an objective to provide credit and other facilities to small farmers, agricultural labourers and artisans in rural areas. The Act was amended in 2015, whereby such banks were permitted to raise capital from sources other than the Centre, states and sponsor banks.

Last month, the finance ministry had a full-day meeting with CEOs of public sector banks. Bankers were urged to sanction loans for productive sectors to accelerate the revival of the economy facing headwinds, including from the Russia-Ukraine war.

Banks were also asked to expedite non-performing assets (NPAs) resolution and focus on recovery of bad loans. The meeting on June 20 also took stock of credit growth, asset quality, and business growth plans of banks.