DFS Pushes RRBs To Strengthen Credit Flow To Rural Borrowers

Department of Financial Services (DFS) Secretary Sanjay Lohiya has urged Regional Rural Banks (RRBs) to increase credit flow to sectors that are important to their respective regions.

At a review meeting on Tuesday, Lohiya has asked RRB chairpersons to take personal initiative to improve lending and explore new and innovative avenues of credit wherever possible.

The push has come as the 28 RRBs have recorded a combined business of more than Rs 13.5 lakh crore in FY26. This has taken their business level above that of some individual public sector banks (PSBs).

The credit-deposit ratio of RRBs has reached an all-time high of 75.2 per cent in FY26. The ratio has indicated that a larger share of deposits has been deployed as loans.

RRBs have also met the targets and sub-targets prescribed under priority sector lending (PSL). This has covered sectors and groups that have traditionally had limited access to formal credit.

Wider Rural Credit Access

RRBs have played an important role in extending formal banking services across rural areas. Their network has included 22,273 branches across 26 states and three Union Territories (UTs), covering about 700 districts.

The banks have also opened more than 54.98 lakh new Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts during FY26. The account openings have expanded access to formal banking for people in rural and underserved areas.

Lohiya has asked RRB chairpersons to focus lending on sectors specific to their areas of operation. The secretary has also called for new lending avenues wherever suitable. This includes exploring ways to expand credit access while responding to the specific requirements of local markets.

Profit Rises, NPAs Fall

RRBs have recorded a net profit of Rs 10,176 crore in 2025-26, compared with Rs 6,820 crore in 2024-25. The profit has risen by 49 per cent over the previous year.

Asset quality has also improved. The gross non-performing asset (GNPA) ratio has fallen to an all-time low of 5.3 per cent, while the net NPA ratio has declined to 2.1 per cent.

The improvement in asset quality has given RRBs a stronger financial base as they have been asked to expand lending in rural markets.

Technology Push

Lohiya has also urged sponsor banks to strengthen the information technology infrastructure of RRBs. RRBs have been asked to accelerate the adoption of modern banking technology and digital delivery of financial services.

The government has also stressed that digital banking should reach different sections of society, including young customers. The review meeting was attended by the chairman of the National Bank for Agriculture and Rural Development (NABARD), chairpersons of all 28 RRBs, and officials from DFS, sponsor banks, the Reserve Bank of India (RBI) and Small Industries Development Bank of India (SIDBI).