Centre notifies amalgamation of 26 RRBs in fourth phase of amalgamation

The Union finance ministry has announced the fourth round of Regional Rural Banks (RRBs) consolidation, reducing the total number from 43 to 28 through the merger of 15 RRBs across 11 states. The initiative aims to improve operational efficiency, cost rationalisation, and financial strength, and aligns with the “One State, One RRB” policy.

Key Highlights:

• States Affected: Andhra Pradesh, Uttar Pradesh, West Bengal, Bihar, Gujarat, Jammu & Kashmir, Karnataka, Madhya Pradesh, Maharashtra, Odisha, Rajasthan.
• Objective: Merge RRBs within each state into a single entity to enhance operational efficiency and reduce inter-bank competition.
• Legal Basis: Powers exercised under Section 23A(1) of the Regional Rural Banks Act, 1976.
• Sponsor Banks: Each merged RRB will be sponsored by a major public sector bank to ensure financial stability.

Example – Bihar:

• Dakshin Bihar Gramin Bank + Uttar Bihar Gramin Bank → Bihar Gramin Bank
• Headquartered at: Patna
• Sponsored by: Punjab National Bank

Structure & Ownership:

• Capital Shareholding:
  • Government of India: 50%
  • Sponsor Bank: 35%
  • State Government: 15%
• Major Sponsors:
  • State Bank of India: 14 RRBs
  • Punjab National Bank: 9 RRBs
  • Canara Bank: 4 RRBs

Current RRB Network (as of March 31, 2024):

• Total RRBs: 43
• Branches: 22,069
• Coverage: 700 districts in 26 states and 3 UTs (Puducherry, Jammu & Kashmir, Ladakh)

Background:

• The RRB consolidation process began in 2005, based on Dr. Vyas Committee Recommendations.
• RRBs cater primarily to rural and semi-urban areas, supporting small/marginal farmers, agricultural labourers, and rural artisans under priority sector lending.

(Sources: PIB & MINT)