Balancing Financial Sustainability and Social Objectives: A Comparative Study of Regional Rural Banks In Northeast India

Abstract

Regional Rural Banks (RRBs) in Northeast India are pivotal in fostering financial inclusion and rural development in one of the country’s most geographically isolated and socio-economically diverse regions. This paper attempts to conduct a comparative analysis of RRBs across Northeast India, evaluating their strengths, challenges, and prospects. The study evaluates the financial performance of these banks of Northeast region using a three-year dataset sourced from financial statements of RRBs, annual reports from NABARD and RBI, and key statistical records. The key metrics such as organizational expansion, workforce size, branch/employee productivity, credit-deposit (CD) ratio, capital-to-risk weighted assets ratio (CRAR), non-performing assets (NPA), profit and loss were analyzed. According to the study, grassroots connectivity and customized financial services are their main advantages, allowing them to assist marginalized communities, micro businesses, and agricultural activities. However, the RRBs confront a number of obstacles, such as inadequate infrastructure, inefficient operations, lack of technological acceptance etc. Despite these hurdles, the study also highlights emerging prospects. However, the findings of the study show how important it is for RRBs to maintain adequate CRAR levels and take proactive steps to reduce credit risks and non-performing assets (NPAs) in order to protect their long-term viability and financial stability in this demographic region.