ANALYSIS OF

REGIONAL
RURAL BANKS
GROUP B9
 INTRODUCTION
INVESTMENT GUIDELINES TO RRBS

SLR Investments: Government Securities and

Treasury Bills
Non-SLR Investments: Debentures, PSU Bonds
and Govt. Securities

INVESTMENT PORTFOLIO OF THE BANK

FORMED AS A PART OF RRB ACT 1976
43 BANKS 525 DISTRICTS 14494 BRANCHES
Held to Maturity: Investments the bank intends
to hold till maturity
Held for Trading: Securities purchased to sell
within short period of time (90 Days)
Available for Sale: Valued at rates declared by
FBIL (investments which do not fall under above
2 categories)

11/11/2021 PRESENTATION TITLE 2

 ANALYSIS OF KEY PARAMETERS
GROSS NON-PERFORMING ASSETS (GNPA) CAPITAL TO RISK (WEIGHTED) ASSETS
N ame of RegionalRuralBank Sponsored Bank State FY 1 9 FY 2 0 N ame of RegionalR uralBank
RATIO State
Sponsored Bank FY 1 9 FY 2 0

Assam Gramin V ikas Bank United Bank of India Assam 46.95 3 7.1 4 Chhattisgarh R ajya Gramin Bank State Bank of India Chhattisgarh 2 1 .1 9 2 2 .02
MadhyanchalGramin Bank State Bank of India Madhya Pradesh 27.65 3 2.3 1 Tripura Gramin Bank United Bank of India Tripura 1 8.4 21 .89
UtkalGrameen Bank State Bank of India Odisha 3 0.3 28 Andhra Pragathi Grameena Bank Syndicate Bank Andhra Pradesh 1 7.98 1 7.75
Odisha Gramya Bank Indian Overseas Bank Odisha 25 .3 2 26.08 Andhra Pragathi Grameena Bank State Bank of India Telangana 1 5 .5 1 6.1 5
Dakshin BiharGramin Bank Punjab NationalBank Bihar 25 .92 25 .92 Punjab Gramin Bank Punjab NationalBank Punjab 1 4.91 1 5 .71

Andhra Pradesh Grameena V ikas Bank State Bank of India Telangana 1 .1 4 1 .03 Bangiya Gramin V ikash Bank United Bank of India W est Bengal 1 .91 -3 .29
Chaitanya Godavari Grameena Bank Andhra Bank Andhra Pradesh 1 .01 1 .1 2 Ellaquai Dehati Bank State Bank of India Jammu and Kashmir 5 .5 -4.02
Saurashtra Gramin Bank State Bank of India Gujarat 0.97 1 .5 6 Odisha Gramya Bank Indian Overseas Bank Odisha 2.24 -4.91
Andhra Pragathi Grameena Bank Syndicate Bank Andhra Pradesh 1 .97 1 .67 Vidharbha Konkan Gramin Bank Bank of India Maharastra 5 .3 7 -8.81
Saptagiri Grameena Bank Indian Bank Andhra Pradesh 1 .81 1 .71 MadhyanchalGramin Bank State Bank of India Madhya Pradesh 5 .07 -1 0.03

11/11/2021 PRESENTATION TITLE 3

 ANALYSIS OF KEY PARAMETERS
CREDIT DEPOSIT RATIO NET INTEREST MARGIN (NIM)
N ame of RegionalRuralBank Sponsored Bank State FY 1 9 FY 2 0 N ame of RegionalRuralBank Sponsored Bank State FY 1 9 FY 20

Andhra Pradesh Grameena V ikas Bank State Bank of India Telangana 1 03 .75 1 04.47 Prathama UP Gramin Bank Punjab N ationalBank Uttar Pradesh - 4.63
TamilNadu Grama Bank Indian Bank TamilNadu - 98.5 7 Baroda Rajasthan Kshetriya Gramin Bank Bank of Baroda Rajasthan 3 .73 4.1 8
Andhra Pragathi Grameena Bank Syndicate Bank Andhra Pradesh 97.46 95 .3 Saptagiri Grameena Bank Indian Bank Andhra Pradesh 4.09 4.09
Telangana Grameena Bank State Bank of India Telangana 91 .43 94.3 9 Mizoram RuralBank State Bank of India Mizoram 3 .78 3 .96
Chaitanya Godavari Grameena Bank Andhra Bank Andhra Pradesh 1 03 .7 93 .62 UttarBiharGramin Bank CentralBank of India Bihar 3 .26 3 .9

Meghalaya R uralBank State Bank of India Meghalaya 3 2 .9 3 3 .48 Madhya Pradesh Gramin Bank Bank of India Madhya Pradesh 2.89 2.22
Chhattisgarh Rajya Gramin Bank State Bank of India Jammu and Kashmir 28.97 3 0.98 Madhya PradeshGramin Bank Bank of India Madhya Pradesh - 1 .99
Nagaland RuralBank State Bank of India Nagaland 29.42 29.76 Ellaquai Dehati Bank State Bank of India Jammu and Kashmir 3 .1 1 .97
MadhyanchalGramin Bank State Bank of India Madhya Pradesh 3 1 .41 29.3 9 Assam Gramin Vikash Bank United Bank of India Assam 1 .8 1 .96
ArunachalPradeshRuralBank State Bank of India ArunachalPradesh 27.75 21 .95 Odisha Gramya Bank Indian Overseas Bank Odisha 2.07 1 .9

11/11/2021 PRESENTATION TITLE 4

 ANALYSIS OF KEY PARAMETERS
RETURN ON ASSETS (ROA) NET PROFIT / LOSS
N ame of RegionalRuralBank Sponsored Bank State FY 1 9 FY 20 Name of RegionalRuralBank Sponsored Bank State FY 1 9 FY 20

Andhra Pradesh Grameena V ikas Bank State Bank of India Telangana 0.44 2 .21 Andhra Pradesh Grameena V ikas Bank State Bank of India Telangana 1 1 203 .8 4 61 75 7.3 2
Tripura Gramin Bank United Bank of India Tripura 1 .62 1 .89 Andhra Pragathi Grameena Bank Syndicate Bank Andhra Pradesh 23 1 1 8.1 281 3 6.61
Saptagiri Grameena Bank Indian Bank Andhra Pradesh 1 .45 1 .63 Prathama UP Gramin Bank Punjab NationalBank UttarPradesh 1 8742.3 7
Telangana Grameena Bank State Bank of India Telangana 0.3 9 1 .3 6 Telangana Grameena Bank State Bank of India Telangana 4286.88 1 71 1 0.3 5
Andhra Pragathi Grameena Bank Syndicate Bank Andhra Pradesh 1 .21 1 .3 4 Tripura Gramin Bank United Bank of India Tripura 1 25 44.76 1 5 787.42

Odisha Gramya Bank Indian Overseas Bank Odisha -1 .85 -3 .09 Madhya Pradesh Gramin Bank Bank of India Madhya Pradesh Column1 -3 81 1 5 .05
Karnataka Vikas Grameena Bank Syndicate Bank Karnataka 0.29 -3 .24 Odisha Gramya Bank Indian Overseas Bank Odisha -21 93 8.8 -3 95 91 .3 5
Ellaquai Dehati Bank State Bank of India Jammu and Kashmir -1 .5 4 -3 .26 UttarBiharGramin Bank CentralBank of India Bihar 1 677.86 -40945 .4
Madhyanchal Gramin Bank State Bank of India Madhya Pradesh -1 .3 7 -4.49 Bangiya Gramin VikashBank United Bank of India W estBengal -27748.08 -461 25 .5 5
Vidharbha Konkan Gramin Bank Bank of India Maharastra 0.43 -7.3 2 Karnataka Vikas Grameena Bank Syndicate Bank Karnataka 5 01 1 .71 -60496.29

11/11/2021 PRESENTATION TITLE 5

 STUDY ON RRB MERGERS
• The government is actively pushing for merger of RRBs towards One state - One RRB concept.
• 196 RRBs in 2004-05 to 43 RRBs 2020-21

• IS THE AMALGAMATION OF RRBS VIABLE

• Case of Pragathi Krishna Gramin Bank and Kaveri Gramin Bank amalgamation into Karnataka
Gramin Bank (FY-2019-20)

• The Return on Advances has Decreased

• Cost of Funds and Cost of Deposits have also Decreased after Amalgamation

11/11/2021 PRESENTATION TITLE 6

 KARNATAKA GRAMIN BANK BARODA GUJARAT GRAMIN BANK

PARAMETER PKGB KGB KARN. % % % %

GRAM. CHANGE CHANGE DGGB BGGB BGGB
CHANGE CHANGE
BNK (PKGB) (KGB) (18-19) (18-19) (2020-21)
DGGB BGGB

RETURN ON 11.07 10.99 10.62 -4.1 -3.4 RETURN ON

ADVANCES 0.1 0.01 0.21 110.0 2000.0
ASSETS

RETURN ON 0.35 0.36 0.18 -48.6 -50.0

RETURN ON
ASSETS 8.32 8.84 8.58 3.1 -2.9
ADVANCES
COST OF 5.21 5.71 5.01 -3.8 -12.3
FUNDS COST OF
4.9 4.7 4.09 -16.5 -13.0
FUNDS
COST OF 6.07 6.13 5.98 -1.5 -2.4
DEPOSITS COST OF
4.98 5.05 4.36 -12.4 -13.7
DEPOSITS
FINANCIAL 4.01 3.39 3.47 -13.5 2.4
MARGIN/
SPREAD FINANCIAL
MARGIN/ 2.41 2.82 3.12 29.5 10.6
OPERATING 2.65 2.07 2.16 -18.5 4.3 SPREAD
PROFIT

11/11/2021 PRESENTATION TITLE 7

 ONE STATE ONE RRB
Currently there are 16 RRBs in India which operate without the presence of any competition within their state

RANK NAME OF REGIONAL RURAL BANK SPONSORED BANK STATE NIM (FY20)
1 MIZORAM RURAL BANK STATE BANK OF INDIA MIZORAM 3.96
2 MANIPUR RURAL BANK UNITED BANK OF INDIA MANIPUR 3.75
3 NAGALAND RURAL BANK STATE BANK OF INDIA NAGALAND 3.65
4 CHHATTISGARH RAJYA GRAMIN BANK STATE BANK OF INDIA CHHATTISGARH 3.58
5 UTTARAKHAND GRAMIN BANK STATE BANK OF INDIA UTTARAKHAND 3.32
6 PUNJAB GRAMIN BANK PUNJAB NATIONAL BANK PUNJAB 3.17
7 HIMACHAL PRADESH GRAMIN BANK PUNJAB NATIONAL BANK HIMACHAL PRADESH 3.04
8 MEGHALAYA RURAL BANK STATE BANK OF INDIA MEGHALAYA 3.03
9 SARVA HARYANA GRAMIN BANK PUNJAB NATIONAL BANK HARYANA 3
10 JHARKHAND RAJYA GRAMIN BANK STATE BANK OF INDIA JHARKHAND 2.76
11 ARUNACHAL PRADESH RURAL BANK STATE BANK OF INDIA ARUNACHAL PRADESH 2.68
12 TAMIL NADU GRAMA BANK INDIAN BANK TAMIL NADU 2.38
13 PUDUVAI BHARTHIAR GRAMA BANK INDIAN BANK PUDUCHERRY 2.34
14 TRIPURA GRAMIN BANK UNITED BANK OF INDIA TRIPURA 2.26
15 KERALA GRAMIN BANK CANARA BANK KERALA 2.23
16 ASSAM GRAMIN VIKASH BANK UNITED BANK OF INDIA ASSAM 1.96

11/11/2021 PRESENTATION TITLE 8

 BASED ON : HIGHEST NIM HIGHEST NET PROFIT LOWEST GROSS NPA
NAME OF REGIONAL RURAL BANK STATE NIM FY20 NAME OF REGIONAL RURAL BANK STATE NPA FY20
MIZORAM RURAL BANK MIZORAM 3.96 PUDUVAI BHARTHIAR GRAMA BANK PUDUCHERRY 1.92
MANIPUR RURAL BANK MANIPUR 3.75 TAMIL NADU GRAMA BANK TAMIL NADU 2.39
NAGALAND RURAL BANK NAGALAND 3.65 NAGALAND RURAL BANK NAGALAND 4.14
CHHATTISGARH RAJYA GRAMIN BANK CHHATTISGARH 3.58 KERALA GRAMIN BANK KERALA 4.3
UTTARAKHAND GRAMIN BANK UTTARAKHAND 3.32 MIZORAM RURAL BANK MIZORAM 5.19
PUNJAB GRAMIN BANK PUNJAB 3.17 CHHATTISGARH RAJYA GRAMIN BANK CHHATTISGARH 5.54
HIMACHAL PRADESH GRAMIN BANK HIMACHAL PRADESH 3.04 ARUNACHAL PRADESH RURAL BANK ARUNACHAL PRADESH 5.59
MEGHALAYA RURAL BANK MEGHALAYA 3.03 HIMACHAL PRADESH GRAMIN BANK HIMACHAL PRADESH 5.77
SARVA HARYANA GRAMIN BANK HARYANA 3 UTTARAKHAND GRAMIN BANK UTTARAKHAND 7.3
JHARKHAND RAJYA GRAMIN BANK JHARKHAND 2.76 PUNJAB GRAMIN BANK PUNJAB 8.5
ARUNACHAL PRADESH RURAL BANK ARUNACHAL PRADESH 2.68 TRIPURA GRAMIN BANK TRIPURA 8.92
TAMIL NADU GRAMA BANK TAMIL NADU 2.38 JHARKHAND RAJYA GRAMIN BANK JHARKHAND 9.05
PUDUVAI BHARTHIAR GRAMA BANK PUDUCHERRY 2.34 SARVA HARYANA GRAMIN BANK HARYANA 11.57
TRIPURA GRAMIN BANK TRIPURA 2.26 MEGHALAYA RURAL BANK MEGHALAYA 11.59
KERALA GRAMIN BANK KERALA 2.23 MANIPUR RURAL BANK MANIPUR 19.76
ASSAM GRAMIN VIKASH BANK ASSAM 1.96 ASSAM GRAMIN VIKASH BANK ASSAM 37.14

CHHATTISGARH RAJYA GRAMIN BANK VS MADHYA PRADESH GRAMIN BANK & MADHYANCHAL
CHHATTISGARH RAJYA GRAMIN BANK
MADHYA PRADESH MADHYANCHAL
PARAMETERS (VALUES % CHANGE % CHANGE
GRAMIN BANK (625 GRAMIN BANK (780 GRAMIN BANK (455
FY20) MPGB MGB
BRANCHES) BRANCHES) BRANCHES)
NIM 3.58 1.99 2.73 80% 31%
GROSS NPA 5.54 20.37 32.31 -73% -83%
ROA 0.08 -2.11 -4.49 -104% -102%
11/11/2021 PRESENTATION TITLE 9
 ONE STATE ONE RRB
• For the fiscal year 2020-21, Chhattisgarh Rajya Gramin Bank's Net Income Margin (NIM) is 80%
higher than Madhya Pradesh Gramin Bank's and 31% higher than Madhyanchal Gramin Bank's,
showing higher amount of earnings on investments due to a stronger hold on the area of operation of
the bank.

• Not only does Chhattisgarh Rajya Gramin Bank have a lower Gross NPA than Madhya Pradesh
Gramin Bank and Madhyanchal Gramin Bank, but it also has a higher Return on Assets (ROA),
implying more returns for each rupee spent.

• The Return on Assets (RoA) of Chhattisgarh Rajya Gramin Bank are also higher when compared to
both Madhya Pradesh Gramin Bank and Madhyanchal Gramin Bank which indicates that the banks
are unable to utilise their assets.

11/11/2021 PRESENTATION TITLE 10

 POLICY MEASURES
• LIBERAL POLICY TO EXTEND REFINANCE TO RRB’S

• PERPETUAL DEBT INSTRUMENTS

• REVISION IN PRIORITY SECTOR LENDING GUIDELINES

• MARGINAL STANDIING FACILITY AND LIQUIDITY ADJUSTMENT FACILITY

11/11/2021 PRESENTATION TITLE 11

 REGIONAL DISPARITIES
While no RRBs in the West or the South incurred losses in FY2019, one or more RRBs in
each region incurred losses in FY2020.

Despite the fact that the number of profit-making RRBs fell to 26 in FY2020 from 39 in
FY2019 their overall profit increased by 25% to 2,203 crores.

RRBs in loss, on the other hand, reported an 83 percent increase in the amount of money
they lost in Financial Year 2020 when compared to Financial Year 2019.

In FY2020, over 75% of RRBs in the Eastern Region incurred losses, and the average
CRAR of Eastern RRBs as of March 31, 2020, was only 2.4 percent.

Even though the South had the lowest gross NPA (percentage) at 4.8 percent, asset quality
improved in all areas (except the South) when compared to March 31, 2019.

11/11/2021 PRESENTATION TITLE 12

 GOVERNMENT INTERVENTION
NABARD takes supervisory concerns seriously and has provisions to downgrade any RRB to B category status if it is
subject to the PCA framework and/or has major governance/internal control difficulties, even if it merits a higher
performance rating.

The cooperative banking system has also been mainstreamed under core banking solutions to enable institutions
manage better with the epidemic and its aftermath. Commercial banks and RRBs have been recapitalized to bolster
their portfolios, and bad assets in banks have been reduced through a range of initiatives.

Now that farmer producers' organizations are gaining center stage, NABARD is also planning to consider them as
credit intermediates or wholesalers once their numbers reach a certain threshold.

The Cabinet Committee on Economic Affairs (CCEA) has extended the RRB recapitalization scheme to FY2021, for
those RRBs that are unable to sustain a minimum CRAR of 9%.

11/11/2021 PRESENTATION TITLE 13

 PROBLEMS FACED BY RRB’S

LIMITED AREA CAPITAL

HEAVILY RELIANT POOR RECOVERY
OF INADEQUACY
ON SPONSOR BANKS RATE
OPERATIONS
SOLUTIONS RECOMMENDED

AMALGAMATIO GOVERNMENT DEPOSIT EXPANDING

N WITH LARGER POLICY MOBILIZATION OPERATIONS
BANKS
11/11/2021 PRESENTATION TITLE 14
 CONCLUSION
• RRBs should not confine their operations only in agriculture sector but also provides benefits to small
entrepreneurs, village and cottage industries and small farmers.

• Should establish proper co-ordination with other institutional financing agencies, co-operative banks, commercial
banks and local participants to enhance their capability and exploit untapped rural market.

• Rural banks need to remove lack of transparency in their operation which lead to unequal relationship between
banker and customer.

• Banks should open their branches in areas where customers are not able to avail banking facilities due to
underdeveloped transport and communication facilities.

• RRBs have to concentrate on speedy, qualitative and secure banking services to retain existing customers and
attract more and more potential customers.

11/11/2021 PRESENTATION TITLE 15

THANK YOU..