The Centre has notified the one-state-one Regional Rural Bank (RRB) with the consolidation of 15 RRBs across eleven states by May 1 to achieve better operational efficiency and cost rationalisation.
At present, 43 RRBs are functioning in 26 States and 2 union territories. Post amalgamation, there will be 28 RRBs in 26 states and 2 UTs with more than 22,000 branches covering 700 districts. Their predominant area of operation is in rural areas with approximately 92% of branches in rural or semi urban areas.
As per the gazette notification, RRBs in 11 states — Andhra Pradesh, Uttar Pradesh, West Bengal, Bihar, Gujarat, Jammu & Kashmir, Karnataka, Madhya Pradesh, Maharashtra, Odisha and Rajasthan — are to be merged into one entity, respectively, for each of these to realise the goal of one RRB per state.
As per the notification, in line with the powers granted under Section 23A(1) of the Regional Rural Banks Act, 1976, these RRBs will merge into a single entity in the public interest and in the interest of the development of the area served by these entities and also in the interest of the RRBs themselves.
For example, Chaitanya Godavari Grameena Bank, Andhra Pragathi Grameena Bank, Saptagiri Grameena Bank and Andhra Pradesh Grameena Vikas Bank sponsored by Union Bank of India, Canara Bank, Indian Bank and State Bank of India amalgamated into a single Regional Rural Bank called as Andhra Pradesh Grameena Bank.
The head office of the new entity would be at Amravati and the RRB would be under sponsorship of Union Bank of India, it said.
In the case of Uttar Pradesh and West Bengal, three RRBs to be merged into one in each of these states.
In Uttar Pradesh, Baroda UP Bank, Aryavart Bank and Prathama UP Gramin Bank sponsored by the Bank of Baroda, Bank of India and Punjab National Bank amalgamated into Uttar Pradesh Gramin Bank with its head office at Lucknow under the sponsorship of Bank of Baroda.
In West Bengal, Bangiya Gramin Vikash, Paschim Banga Gramin Bank and Uttarbanga Kshetriya Gramin Bank sponsored by the Punjab National Bank, UCO Bank and Central Bank of India to be amalgamated into West Bengal Gramin Bank with its head office in the state capital under the sponsorship of Punjab National Bank.
In eight states — Bihar, Gujarat, Jammu & Kashmir, Karnataka, Madhya Pradesh, Maharashtra, Odisha and Rajasthan, two RRBs would be merged into one.
This is the fourth phase of amalgamation. In the previous three phases viz. phase-I (FY06 to FY10) number of RRBs were reduced from 196 to 82, phase-2 (FY13 –15) number of RRBs were reduced from 82 to 56 and phase-3 (FY19 to FY21) number of RRBs were reduced from 56 to 43.
RBs play a crucial supporting role in the rural economy. About 70% of Regional Rural Banks credit flows through agricultural sector, 64% is targeted towards weaker sections including small and marginal farmers. As of March 31, 2024, RRBs together had deposits worth Rs 6.6 lakh crore or 3.2% share of all bank deposits. The RRBs share in advances was Rs 4.7 lakh crore or 2.9% of all bank advances.
RRBs have recorded the highest ever consolidated net profit of Rs 7,571 crore in FY 2023-24. The shareholding pattern of RRBs is Centre 50%, sponsor banks 35%, and states 15%.