Top priority has been given to agriculture sector by the United
Progressive Alliance, present ruling coalition of political parties
in India. This can be seen as one of the reasons motivating finance
minister, P. Chidambaram to focus on the needs of common man in
his new budget. And, it apparently reflects in his announcements
on regional rural banks (RRBs).
RRBs, to treat on the par with any other scheduled commercial
bank in the country, will now be permitted to accept non resident
external (NRE)
or Foreign Currency Non Resident (FCNR) deposits.
The government has also extended the Securitization and Reconstruction
of Financial Assets and Enforcement of Securitization of Interest
(Sarfaesi) Act to loans advanced by these banks, in a bid to decrease
their non performing assets (NPAs).
As per the data compiled by Reserve
Bank of India (RBI), the total NRE/FCNR deposits during 2007,
is evaluated to be at $37,751 million as against $35,134 million
in 2005-06. Moreover, the amount is to be further increased in
very near future, with a number of banks offering lucrative interest
rates.
The minister also proposed to recapitalize, in a phased manner,
the 40 regional rural banks with negative net worth. RRB had earlier
requested the finance ministry to provide them with the funds
of Rs. 2000 crore, to help them to wipe out overall losses in
so cleaning their balance sheets.
Envisaging the same, the budget says to establish two different
funds, each containing a corpus of Rs. 500 crore. The one is the
Financial Inclusion Fund, which would cater to the development
cost and promotional interventions in rural areas, while the other
is Financial Inclusion technology Fund, which would see to the
technology adoption.
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