Lalit Singh, a farmer in Aligarh, Uttar Pradesh, was a dedicated customer of a regional rural bank (RRB). He recently: moved his account to a private-sector bank.
"Since the RRB did not offer internet banking, it made things difficult for me. The facilities are better at other banks," he explains.
Abranch manager of an RRB in western Uttar Pradesh says the sponsor banks have emerged as their primary competition. The increasing presence of private sector banks has made the situation more challenging, as RRBs are left to fight the battle with outdated tools while other banks have advanced resources in terms of technology and basic infrastructure.
"Small finance banks have made the competition tougher," said an RRB executive who requested anonymity.
In western Uttar Pradesh, many RRB branches lack security guards despite holding cash reserves of around 10 lakh. Staffed by just a manager and a cashier, these branches often operate in subpar conditions. The cash rooms are poorly maintained, with faded walls and an unpleasant odour. Some branches even have a single room doubling as a washroom. Air conditioning remains unaffordable, with only basic coolers provided.
A recently appointed RRB manager in western UP says customers expect ATM cards and cheque books immediately, which the RRB is struggling to provide promptly. "In private banks, customers receive all the basic tools within hours. In contrast, we are required to visit regional or main offices to collect ATM cards and cheque books, then we hand them over to customers, which takes a lot of time," he rues.
As a result, many of the customers of the RRB branch have shifted to its sponsor bank, though the branch is suitably located near a Mandi, which sees heavy cash transactions.
On August 19, Finance Minister Nirmala Sitharaman is scheduled to review the performance of RRBs and may come up with a course of action.
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