IPO push for RRBs: Finance Ministry asks 3 banks to submit plans by March-end, says report

The Centre is aiming to list at least five RRBs over the next two financial years, with as many as three likely to hit the markets in FY27, the official said

The Ministry of Finance has directed three regional rural banks (RRBs) to prepare and submit their draft initial public offering (IPO) plans by the end of March, Business Standard has reported, citing a senior government official.

As per the report, the draft IPO blueprints are to be submitted to the respective sponsor banks as well as the Department of Financial Services (DFS). The official, who spoke on condition of anonymity, said the DFS held a review meeting on Tuesday to assess the IPO preparedness of Haryana Gramin Bank, Kerala Gramin Bank and Tamil Nadu Grama Bank. Senior officials from the three RRBs and their sponsor banks were present at the meeting, according to Business Standard.

The official told Business Standard that the capital planning committee and the IPO sub-committee would spell out the valuation and assessment methodology for raising fresh capital. A detailed checklist of statutory and regulatory compliances required from bodies such as the Securities and Exchange Board of India (Sebi) and the Reserve Bank of India (RBI) will also be drawn up.

As reported by Business Standard, a draft proposal, after incorporating these requirements, will be prepared and submitted for vetting by the end of the current financial year.

The Centre is aiming to list at least five RRBs over the next two financial years, with as many as three likely to hit the markets in FY27, the official said, according to Business Standard.

Following the consolidation of RRBs under the 'One State, One RRB' initiative-which reduced their number from 48 to 23-the ministry had, in May, asked sponsor banks to identify eligible candidates for listing, Business Standard noted.

Under the current shareholding structure, the central government holds a 50 per cent stake in RRBs, while state governments and sponsor banks own 15 per cent and 35 per cent, respectively, the report said.

Financially, Haryana Gramin Bank, sponsored by Punjab National Bank, posted a net profit of about Rs 376.6 crore in FY25, with a capital to risk-weighted assets ratio (CRAR) of 15.31 per cent, Business Standard reported. Its gross non-performing asset (GNPA) ratio declined to 1.95 per cent, while net NPAs stood at zero.

Tamil Nadu Grama Bank, sponsored by Indian Bank, reported a net profit of around Rs 367.39 crore in FY25 and a CRAR of 13.70 per cent. Its GNPA ratio was 0.79 per cent, with net NPAs at zero, according to Business Standard.

Kerala Gramin Bank, backed by Canara Bank, recorded a net profit of about Rs 312.89 crore in FY25, with a CRAR of 13.93 per cent. However, its GNPA ratio stood at 1.82 per cent, while net NPAs were maintained at zero, the report said.

According to the draft eligibility norms for listing RRBs issued in 2022, lenders must have a minimum net worth of roughly Rs 300 crore and maintain a capital adequacy ratio above the regulatory threshold of 9 per cent for each of the previous three years, Business Standard reported. They must also have posted an operating profit of about Rs 15 crore in at least three of the last five years and achieved a return on equity of 10 per cent in three out of five years. Additionally, eligible banks should not be under the RBI's prompt corrective action framework.