Government asks RRBs to expand their portfolios

Context

In order to provide credit to rural consumers, the government is planning to leverage the 15,000-odd strong network of the 43 Regional Rural Banks (RRBs) in the country by asking them to expand their portfolio by adding new segments.

Where would the extended credit go?

• The proposed mandate will require RRBs to go beyond their mainstay of agricultural loans to extending credit for education, housing and even small businesses in rural India.
• The initiatives and targets will be part of the Enhanced Access & Service Excellence (EASE) reforms being undertaken by the Centre. EASE reforms were launched in 2018 for the public sector banks and are currently in their fifth phase.

Reason behind the move

• The Department of Financial Services has flagged concerns about public-sector banks having slowed lending to education loans due to higher defaults and the continuing struggle of the Micro Small and Medium Enterprise sector which suffered the most in the wake of the Covid-19pandemic and national and local lockdowns.