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News: The Department of Financial Services approved Viability Plan 2.0 to strengthen financial stability and improve operational efficiency in Regional Rural Banks.
About Viability Plan 2.0 for Regional Rural Banks (RRBs)
- Viability Plan 2.0: It is a revised three-year framework to improve financial sustainability and long-term competitiveness of RRBs.
- Implementing Ministry: Department of Financial Services (DFS) under the Ministry of Finance
- Duration: It will be implemented for three years from 2025-26 to 2027-28.
- The earlier plan covered the period from FY2021-22 to FY2024-25.
- Aim: The plan aims to enhance financial sustainability, improve operational efficiency, strengthen governance reforms, and ensure long-term competitiveness of RRBs.
- Viability Plan 1.0: The Viability Plan 1.0 for Regional Rural Banks (RRBs) was a 3-year board-approved framework initiated in FY 2022-23.
- It was aimed at ensuring sustainable viability, it focused on credit expansion, NPA reduction, digital adoption, and cost rationalization, following recapitalization assistance.
- Key Features of Viability Plan 2.0 for Regional Rural Banks (RRBs):
- Performance Parameters: The plan includes 30 performance parameters to monitor and improve the functioning of RRBs.
- Four Key Pillars: The framework is based on four major pillars –
- operational excellence, asset quality, profitability, and growth.
- Critical metrics: The plan uses important indicators such as Capital to Risk Weighted Assets Ratio (CRAR), credit-deposit ratio, digital adoption, Non-Performing Asset (NPA) levels, recovery performance, and profitability ratios to assess the performance of Regional Rural Banks.
- Comprehensive Monitoring Framework: The plan provides a balanced framework to assess and monitor the overall health and efficiency of all 28 RRBs.
- Scheme Monitoring: The framework evaluates the performance of RRBs in implementing Central Government schemes.
