The Finance Ministry has started the fourth phase of merger of Regional Rural Banks (RRBs), due to which the number of such banks is likely to reduce from 43 at present to 28. According to the blueprint prepared by the Finance Ministry, 15 regional rural banks in different states will be merged. RRBs were merged in Andhra Pradesh (which has the maximum number of four RRBs), Uttar Pradesh and West Bengal (three each) and Bihar, Gujarat, Jammu and Kashmir, Karnataka, Madhya Pradesh, Maharashtra, Odisha and Rajasthan (two each). Will go. In the case of Telangana, the merger of Regional Rural Banks will be subject to division of the assets and liabilities of Andhra Pradesh Grameena Vikas Bank (APGVB) between APGVB and Telangana Grameena Bank.
One State-One RRB
The Department of Financial Services, in a letter sent to the heads of public sector banks, said that in view of the rural expansion and agro-climatic or geographical nature of Regional Rural Banks and to maintain the special feature of Regional Rural Banks i.e. their closeness to the communities. To achieve the goal of One State-One Regional Rural Bank, a need is being felt for further consolidation of Regional Rural Banks to provide greater efficiency and cost rationalization benefits.
Banks will be reduced from 43 to 28
The statement said that a blueprint has been prepared in consultation with the National Bank for Agriculture and Rural Development (NABARD) for further consolidation, which will reduce the number of RRBs from 43 to 28. The Department of Financial Services has sought comments from the heads of sponsor banks of regional rural banks till November 20. The Center had initiated structural consolidation of RRBs in 2004-05, resulting in reduction of the number of such institutions from 196 to 43 by 2020-21 through three phases of merger.
Government’s 50 percent stake
These banks were established under the RRB Act, 1976, with the objective of providing loans and other facilities to small farmers, agricultural laborers and artisans in rural areas. This Act was amended in 2015 under which such banks were allowed to raise capital from sources other than central, state and sponsor banks. The Center currently holds 50 per cent stake in RRBs, while 35 per cent and 15 per cent are held by the respective sponsor banks and state governments respectively.
