Recapitalisation plan for regional rural banks approved

Recapitalisation plan for regional rural banks approved

Part of: GS Prelims and GS-III – Economy

In News: 

• The Centre has approved Rs.1.304 crore recapitalisation plan for regional rural banks.

Key takeaways:

• It is done to improve their capital-to-risk weighted assests ratio (CRAR).
• These institutions that play major role in provision of credit in rural areas shall be strengthened.

Important value additions:

Regional Rural Banks.

• Regional Rural Banks (RRBs) are Indian Scheduled Commercial Banks (Government Banks) 
• They operate at regional level in different states of India. 
• They have been created with a view to serve primarily the rural areas of India with basic banking and financial services.

Capital-to-Risk weighted Assets Ratio (CRAR)

• The CRAR is the capital needed for a bank measured in terms of the assets (mostly loans) disbursed by the banks. 
• Higher the assets, higher should be the capital by the bank.