The government intends to use the roughly 15,000-strong network of the 43 Regional Rural Banks (RRBs) in the nation to provide credit to rural consumers by pushing them to broaden their portfolio by including new segments. The new mandate will force RRBs to give credit for small enterprises, housing, and even education in rural India in addition to their traditional agricultural loans.
The Department of Financial Services has raised concerns about public-sector banks slowing lending for education loans due to higher defaults and the ongoing struggle of the Micro Small and Medium Enterprise sector, which suffered the most in the wake of the Covid-19 pandemic. At the same time, the government is pushing the RRBs.