Various measures including recapitalization, rationalization of branch network, providing better access to non fund business, expanding avenues of investment and advances, upgrading the level of technology and taking up select RRBs for comprehensive restructuring were taken. Further, they were permitted to lend to non-target group borrowers up to 60 per cent of new loans.
From January, 1995 the investment avenues for RRBs were broadened to improve the operational efficiency and profitability. In December, 1996 the investment policy was further liberalised, to accord parity with commercial banks, permitting RRBs to invest in shares and debentures of corporate and units of Mutual Funds with a ceiling up to 5% of the incremental deposits of the bank during the previous year.