"This will enable the RRBs to maintain the minimum prescribed capital to risk weighted assets ratio (CRAR) of 9 per cent," the Cabinet said in a statement.
"A strong capital structure and minimum required level of CRAR will ensure financial stability of RRBs which will enable them to play a greater role in financial inclusion and meeting the credit requirements of rural areas."
Currently, there are 56 RRBs in the country. On provisional basis, as on March 31, 2017, the total credit given by RRBs is Rs 228,599 crore.
The scheme was started in FY2010-11 and has been extended twice in the year 2012-13 and 2015-16. The last extension was up to March 31, 2017.
A total amount of Rs 1,107.20 crore, as the Indian government's share, out of Rs 1,450 crore, has been released to RRBs up to March 31, 2017, the statement said.
"The remaining amount of Rs 342.80 crore will be utilised to provide recapitalisation support to RRBs whose CRAR is below 9 per cent, during the years 2017-18, 2018-19 and 2019-20."
As per the statement, the identification of RRBs which require recapitalisation will be decided in consultation with the National Bank For Agriculture And Rural Development.
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