Government Announces Merger of 26 Regional Rural Banks

Key Takeaways

Amalgamation of 26 RRBs announced.
Focus on efficiency and cost reduction.
Operating in 26 states and 2 UTs.
Over 22,000 branches serving rural areas.
'One State One RRB' initiative will start May 1.

New Delhi, April 8 (NationPress) The Finance Ministry's Department of Financial Services has officially announced the merger of 26 Regional Rural Banks (RRBs) based on the principles of 'One State One RRB'. This initiative is part of the fourth phase aimed at enhancing operational efficiency, as detailed in a statement released on Tuesday.

The Finance Ministry had initiated a merger strategy in November 2024 for stakeholder consultation. Following discussions, the merger of these 26 RRBs across 10 states and one Union Territory has been executed, primarily focusing on scale efficiency and cost rationalization, according to the statement.

Currently, 43 RRBs are operational in 26 states and 2 Union Territories. After the merger, there will be 28 RRBs remaining in the same number of states and territories, overseeing more than 22,000 branches across 700 districts. The majority of these branches operate in rural regions, with about 92 percent located in rural and semi-urban areas, the statement noted.

This merger marks the fourth phase of consolidation. In previous phases—Phase-I (FY 2006 to FY 2010) saw a reduction from 196 to 82 RRBs, Phase-2 (FY 2013 to FY 2015) from 82 to 56, and Phase-3 (FY 2019 to FY 2021) from 56 to 43, according to the official statement.

The Finance Ministry has initiated a 'One State One RRB' campaign across 11 states, including Andhra Pradesh, Karnataka, Gujarat, West Bengal, and Rajasthan, by merging different RRBs into a singular entity. This scheme is set to commence on May 1.

"In accordance with the powers granted by sub-section (1) of Section 23A of the Regional Rural Banks Act, 1976, the Central government hereby approves the merger of the specified Regional Rural Banks into a single Regional Rural Bank, effective from the 1st day of May, 2025, encompassing all associated constitution, property, powers, rights, interests, authorities, and privileges, along with corresponding liabilities, duties, and obligations," as stated in the notification by the Finance Ministry.

Regional Rural Banks in India are vital for fostering rural economic growth by offering financial services, particularly credit and other resources, to small and marginal farmers, agricultural laborers, artisans, and small business owners in underserved rural regions.