The government may infuse close Rs 10,000 crore to Rs 15,000 crore over five years into Regional Rural Banks (RRBs) to help them meet the minimum capital requirement, The Economic Times reported.
The move could feature as part of the upcoming Budget 2020, set to be tabled on February 1. It would help boost the weak farm credit situation in the country, sources told the paper.
The government is also considering setting up state-level rural banks by merging several RRBs in states, with the National Bank for Agriculture and Rural Development (NABARD) at the helm, it added.
Moneycontrol could not independently verify the report.
The Reserve Bank of India (RBI) mandates a minimum 9 percent capital-to-risk-weighted assets ratio (CRAR).
NABARD annually identifies rural banks which have been unable to meet this CRAR requirement and thus need recapitalisation. As of now, there are 45 such RRBs in India.The Centre has also sought the assistance of some states where RRBs are financially weak, asking them to consider a contribution of 15 percent towards these in accordance with their holding structure, the report said.