India Proposes Merger of Regional Rural Banks to Strengthen Capital Reserves: Document Reveals

Regional Rural Banks | Delhi: The Center is looking to merge regional rural banks (RRBs) to make them more efficient and control costs. This process has already been done in several stages.. Union Ministry of Finance has started the exercise to undertake the fourth stage of the integrated process. With this, the existing number of rural banks will decrease from 43 to 28. A road map for this has already been prepared.

As part of the merger process, 15 RRBs in different states will be merged. There are 4 RRBs in Andhra Pradesh, 3 in Uttar Pradesh, 3 in West Bengal, 20 RRBs in Bihar, Gujarat, Jammu and Kashmir, Karnataka, Madhya Pradesh, Maharashtra, Odisha and Rajasthan. The merger process of Andhra Pradesh Grameen Vikas Bank and Telangana Grameen Bank is subject to adjustment of debts and assets. An official from the Department of Financial Services said that the performance of the respective banks will improve due to single state-single RRB. It is said that currently discussions are going on with NABARD.

Regional Rural Banks were formed under the RRB Act, 1976 to provide loans to small farmers, agricultural laborers and traders in rural areas. Their ownership structure is different from that of public sector banks. The central government currently has a 50% stake in regional rural banks. Of the remaining 50 percent, the sponsored bank (sponsor) holds 35% and the respective state government holds 15%. There are 5 rural banks in Telugu states (Telangana, Andhra Pradesh). Andhra Pradesh Grameen Vikas Bank, Andhrapragati Grameen Bank, Telangana Grameen Bank, Chaitanya Godavari Grameen Bank, Saptagiri Grameen Bank... Chittoor are doing their operations.