Govt identifies 4 RRBs for IPOs

Govt identifies 4 RRBs for IPOs

The government has identified four Regional Rural Banks (RRBs) for listing on stock exchanges in line with the Union Budget 2018-19.

Guidelines for the listing are almost ready, and entail details like quantum of stake dilution, instrument to be floated and category of possible investors in the public issue, sources said.

They further said the four RRBs are eligible to come out with IPOs and they may hit the capital markets this year.

“It is proposed to allow strong RRBs to raise capital from the market to enable them increase their credit to rural economy,” Finance Minister Arun Jaitley had said in his Budget speech, earlier this year.

In a bid to make RRBs eligible and successfully raise capital from the market, a slew of reforms have been implemented including compliance with corporate governance, technology upgradation and capacity-building.

There are 56 RRBs in the country with a combined balance sheet size of Rs 4.7 lakh crore. Of these, 50 are in profit, according to financial statements of RRBs for March 2017, released by National Bank For Agriculture and Rural Development (Nabard).

RRBs operating through about 21,200 branches witnessed 17% rise in net profit to Rs 2,950 crore in 2016-17. Their loans and advances outstanding under various schemes rose 15% to Rs 3.5 lakh crore as of March 2017.

These banks were formed under the RRB Act, 1976, with an objective to provide credit and other facilities to small farmers, agricultural labourers and artisans in rural areas.

The Act was amended in 2015, whereby such banks were permitted to raise capital from sources other than the Centre, states and sponsor banks.

Currently, the Centre holds 50% in RRBs, while 35% and 15% are with concerned sponsor banks and state governments, respectively.

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