Regional rural banks in India expanded their lending by 10.3% in 2025-26, surpassing priority sector targets and achieving a record net profit, highlighting their increasing role in rural development and financial inclusion.
Regional rural banks expanded their lending sharply in financial year 2025-26, with gross loans outstanding rising 10.3% from the previous year to Rs 5.78 lakh crore, according to the finance ministry. The government said the move reflects the banks’ growing role in channeling institutional credit into rural India while supporting financial inclusion.
The banks also exceeded the Reserve Bank of India’s priority sector lending norms by a comfortable margin. Their average achievement against the 75% target stood at 91.7% of adjusted net bank credit, with almost all regional rural banks meeting the overall requirement, the ministry said. Priority sector lending is the RBI framework that directs banks to extend credit to areas such as agriculture, micro enterprises and weaker sections.
Agriculture remained the largest part of the portfolio, with outstanding farm-related credit at Rs 3.78 lakh crore. The ministry said nearly all of that lending went to crop cultivation, allied activities and related rural investment. Credit to micro, small and medium enterprises totalled Rs 66,978 crore, and more than 95% of that was directed to micro businesses, including first-generation entrepreneurs, self-employed workers, artisans and small units in rural and semi-urban areas.
Regional rural banks also provided Rs 3.49 lakh crore in credit to weaker sections, underlining their role in widening access to formal finance. Separate reports from Tribune India and other outlets said the sector also posted a record consolidated net profit of Rs 10,177 crore in the same financial year, suggesting that stronger lending has been accompanied by improved financial performance.
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