New Delhi: The Government of India has decided to administer 'kiss of life' to 29 ailing regional rural banks (RRBs) by March 31, 2010 at a cost of nearly Rs 1,850 crore. But there is a rider. The Centre wants the state governments to chip for the exercise.
Union Finance Minister P Chidambaram says where the state governments put in its 15 per cent share, those RRBs would be recapitalised immediately.
"We intend to write to the state governments shortly," he says.
While the Centre plans to pump in Rs 925 crore, sponsored public sector banks would contribute Rs 647.5 crore and states are expected to infuse Rs 277.5 crore.
The exercise would be undertaken 'immediately' if state governments agree to put in their 15 per cent share for reviving these banks, Finance Minister P Chidambaram said after his first meeting with the chairmen of RRBs, that lasted over four hours.
If the states do not come forward with their contribution, recapitalisation of these RRBs would take some time, he said. The Centre has 50 per cent share in RRBs, with 35 per cent being owned by sponsored public sector banks and the remaining 15 per cent with the state governments.
The Finance Minister said since state governments hold 15 per cent share in RRBs, he does not want to dilute their shareholding through recapitalisation in case they do not put in their share.
To a query whether recapitalisation would be done through cash or bonds, he said banks invariably infuse cash. "But the Centre has both the options of recapitalising RRBs — cash or bonds." In all, there are 96 RRBs with a total of 14,595 branches.
(With PTI inputs)
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