Performance evaluation of regional Rural Banks (RRBs): An empirical study on Paschim Banga Gramin Bank in West Bengal

This study assesses the performance of the Paschim Banga Gramin Bank (PBGB), a Regional Rural Bank located in West Bengal, India, over the fiscal years 2019-20 to 2023-24. The analysis utilizes secondary data derived from banks’ annual reports and concentrates on key performance indicators, including business growth, asset quality, profitability, and capital adequacy. The findings indicate significant enhancements in the PBGB's financial health throughout the study period. Notably, the bank's asset quality has improved, as evidenced by a substantial reduction in Gross and Net Non-Performing Asset (NPA) percentages and an increase in the Provision Coverage Ratio. Profitability has also seen an upturn, with the bank moving from a loss in 2019-20 to profit in 2023-24, as demonstrated by the positive Return on Assets (ROA). The capital-to-risk-weighted assets ratio (CRAR) has strengthened, surpassing regulatory norms and signifying restored financial stability. Nonetheless, this study identifies areas requiring further enhancement, such as the credit deposit ratio, which remains below industry averages, and the recent increase in borrowing costs. The findings underscore PBGB's resilience and adaptability to evolving economic conditions and offer valuable insights for policymakers, bank management, and researchers in the domain of rural banking and financial inclusion.