Consolidation to cut RRB count to 44 in short term
The department of financial services has asked RRBs operating in the same geographies to merge with a single sponsoring bank for better use of the latest technology and other resources, as well as to expedite the implementation of the financial inclusion programme, official sources told FE. The department has also asked the sponsoring banks concerned to issue no-objection certificates for this strategy.
However, discussions with states, which hold a 15% stake in these banks, are proving to be tough with states such as Tamil Nadu, Kerala and Haryana yet to give any response to the Centre on the initiative, sources said. Punjab, which had earlier given its consent, later withdrew it citing difficulties without giving a detailed explanation. While the state holds 15% each in an RRB, the Centre has a 50% stake and the bank sponsoring the RRB has a 35% holding.
The first phase of consolidation saw the number of RRBs falling from 196 in 2005 to 82 by the end of March 2012. Here, consolidation was carried out by merging different RRBs within a state with their respective sponsoring banks.
In the second phase, which started this fiscal, the strategy is to amalgamate RRBs operating in geographies
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