Centre Announces Merger Of 26 Regional Rural Banks To Boost Rural Finance; Details Inside

Centre Announces Merger Of 26 Regional Rural Banks To Boost Rural Finance; Details Inside Abplive | 08/04/2025 20:11:07

The Department of Financial Services under the Finance Ministry has announced the amalgamation of 26 Regional Rural Banks (RRBs) based on the 'One State One RRB' principle, marking the fourth phase of its ongoing initiative to enhance efficiency, according to an official statement released on Tuesday.

The amalgamation plan was initially launched in November 2024 for stakeholder consultation. Following these discussions, the merger of 26 RRBs across 10 states and one Union Territory has been implemented, with a primary focus on improving scale efficiency and optimising costs, the statement added.

Currently, 43 Regional Rural Banks (RRBs) operate across 26 states and 2 Union Territories. Following the latest amalgamation, this number will be reduced to 28 RRBs, covering the same geographical expanse with over 22,000 branches spanning 700 districts. The majority of these branches—around 92 per cent—are located in rural and semi-urban areas, focusing primarily on serving rural communities, according to the official statement.

This marks the fourth phase of RRB amalgamation. In previous phases, the number of RRBs was progressively reduced: from 196 to 82 during Phase I (FY 2006–FY 2010), from 82 to 56 in Phase II (FY 2013–FY 2015), and from 56 to 43 in Phase III (FY 2019–FY 2021), the statement added.

The Finance Ministry has launched the 'One State One RRB' initiative in 11 states, including Andhra Pradesh, Karnataka, Gujarat, West Bengal, and Rajasthan, consolidating multiple RRBs into single entities per state. This new structure is set to take effect from May 1.

FinMin Notification

"In exercise of the powers conferred by sub-section (1) of Section 23A of the Regional Rural Banks Act, 1976, the Central government hereby provides for the amalgamation of the said Regional Rural Banks into a single Regional Rural Bank, which shall come into effect on and from the 1st day of May, 2025 with such constitution, property, powers, rights, interests, authorities and privileges; and with such liabilities, duties and obligation," a notification by the Finance Ministry states.

Regional Rural Banks in India are vital for fostering rural economic growth by offering financial services, especially credit and related facilities, to small and marginal farmers, agricultural laborers, artisans, and small entrepreneurs in underserved rural regions.