Bankers say nine RRBs, three from State Bank of India (SBI), two from Indian Bank and one RRB each from Bank of Baroda (BoB), Punjab National Bank (PNB), Canara Bank and Union Bank of India are being considered for a listing in the local stock market.
Although talks to list these entities are at a preliminary stage, they all meet the minimum parameters like net worth, capital adequacy and a track record of profitability, bankers said. The banks did not respond to an email seeking comment.
“It is still early days but the initial indications are that it will be among these banks that the first RRB will be listed. Banks boards have already had preliminary discussions on the possibility but everything is at such a nascent stage. We will need permission from the central government, Reserve Bank as well as state government so it will take some time,” said a banker aware of the discussions.
In October, the government issued draft guidelines to enable RRBs to be listed. The criteria included net worth of at least ₹300 crore and capital adequacy among the minimum required 9% during the previous three years and a track record of profitability with an operating profit of a minimum of ₹15 crore for at least three out of the previous five years.
Bankers said these nine banks qualify according to these parameters and the first RRB to list in the local market would most likely be from this bunch as they are the best performing. For example, the Baroda Rajasthan Khetriya Gramin Bank, a BoB-sponsored RRB, has reported a net profit of ₹353 crore in the first nine months of FY23 up from ₹319 crore a year ago. Its capital adequacy has also improved to 13.19% from 12.50%, indicating better financial health.
Other banks that qualify include SBI-sponsored Andhra Pradesh Grameena Vikas Bank, Telangana Grameena Bank and Saurashtra Gramin Bank; PNB-sponsored Tripura Gramin Bank; Canara Bank’s Andhra Pragathi Grameena Bank; Union Bank’s Chaitanya Godavari Grameena Bank; and Indian Bank’s Saptagiri Grameena Bank and Pallavan Grama Bank. The financial parameters of individual banks could not be ascertained.
Currently, the centre holds a 50% stake in RRBs, sponsor banks hold 35% while state governments have 15%. All these will be proportionately diluted at the public offer.