Page 6 - Banking Finance March 2021

BANK UPDATE

some of the country's bigger banks, the including drinking water, primary them similarly. There are lenders with
officials said. health and education. the first charge on the security as well
The government, however, will It could be noted that in the Union as unsecured lenders. Also, among
continue to hold a majority stake in Budget 2021-22, Finance Minister lenders, foreign banks are quick to
write off loans, but smaller public
India's largest lender State Bank of Nirmala Sitharaman announced to
sector lenders do not have the capital
India (SBI), which is seen as a 'strategic enhance the allocation to the RIDF to
to do that.
bank' for implementing initiatives such Rs. 40,000 crore from Rs. 30,000 crore.
as expanding rural credit. A finance She also increased the corpus of the Banks have proposed to the
ministry spokesman declined to Micro Irrigation Fund by Rs 5,000 crore government the creation of a public
comment on the matter. to Rs 10,000 crore. sector National Asset Reconstruction
Company, which can take over bad
Nabard disburses Rs. Chintala noted that the increased loans from all the consortium banks.
allocations to both the funds will help This will be in respect of 70-80 large
16,500 crore under rural push rural infrastructure projects loans of over Rs.500 crore, totaling to
infra fund across states. around Rs. 2.7 lakh crore.

Nabard said it has sanctioned Rs He said the Union Budget has
30,200 crore and disbursed Rs 16,500 accelerated sustainable agriculture RBL Bank's profit surges
crore for various rural infrastructure sector's growth by pegging an 110%
projects across the country under the agriculture credit target of Rs. 16.5
Rural Infrastructure Development lakh crore. RBL Bank has doubled its net profit in
Fund (RIDF) in the first 10 months of The recapitalisation of Rs 2,000 crore Q3FY21 to Rs. 147 crore, compared to
the current financial year. to Nabard and that of Rs 1,200 crore Rs.70 crore in the corresponding
period on FY20, driven by other income
The RIDF, which was set up in 1995, is to regional rural banks will help and low operating cost. The bank
a dedicated fund to create social achieve the target of agriculture earned its highest-ever operating
assets in rural India. credit, he added. profit at Rs. 805 crore in the quarter,
"In FY21, the sanctions to the RIDF up 12 per cent from a year ago.
stood at Rs 30,200 crore as against the PSU bankers expect Govt Net interest income was down 2 per
corpus of Rs. 30,000 crore. The to guarantee ARC's units cent YoY to Rs. 908 crore, compared
disbursement for the current financial Public sector banks feel that the asset to Rs. 923 crore due to interest
year as on January 31, 2021 stands at reconstruction company (ARC) reversals but other income was up 19
Rs. 16,500 crore," Nabard Chairman G proposed in the Union Budget will need per cent to Rs. 580 crore as core fee
R Chintala said in a statement. some kind of a government guarantee income improved to surpass pre-covid
Since the inception of the fund, Nabard or assurance so that banks can transfer levels. The bank reported net interest
has disbursed Rs 3.11 lakh crore for loans without having to take a hit on margin of 4.19 per cent.
different rural infrastructure projects, their earnings.
it said. The Union Budget has proposed the SBI profit falls 7% but
Chintala said this fund has constituted setting up of a central ARC that will buy asset quality improves
around 10 per cent of gross capital loans from banks by issuing them State Bank of India, saw its net profit
formation in rural areas. security receipts. The assets will be fall by 6.93 per cent to Rs. 5,196 crore
managed by professional managers
Over the years, the RIDF has become in the December quarter of financial
and sold to alternate investment funds
a dependable source of funding for year 2020-21 (Q3FY21) from Rs. 5,583
states and union territories for or resolved through any of the crore in the corresponding quarter last
building, strengthening rural available mechanisms. year. The dip was a result of a surge in
infrastructure in critical areas like The challenge in transferring the loans interest income in Q3 FY20 because of
agriculture and irrigation, rural is that each lender values them a one-time recovery in Essar Steel
connectivity and social sector, differently and so does not provide for account of Rs. 4,039 crore.

6 | 2021 | MARCH | BANKING FINANCE