‘One State-One RRB’: Govt Reduces Regional Rural Banks to 28 for Stronger Rural Banking
Image via IANS
New Delhi – The government has merged several Regional Rural Banks (RRBs) across the country under its ‘One State-One RRB’ policy, bringing down their number from 43 to 28, with effect from May 1, 2025. The move aims to simplify management, cut costs, and improve service delivery in rural banking.
In a written response in the Lok Sabha on the first day of the Monsoon Session, Union Finance Minister Nirmala Sitharaman said the government is carrying out “Phase IV” of RRB amalgamations across 26 states and 2 union territories.
The aim, she said, is to create state-level RRBs with contiguous areas of operation. This consolidation is expected to bring efficiency in operations and better use of technology, while ensuring financial stability of the banks.
Greater Financial Strength
Sitharaman noted that amalgamated banks have stronger capital bases, making them more stable and resilient. “By consolidating operations and removing redundancies from separate administrative structures, the merger is expected to lead to cost savings,” she said.
The government also expects that a larger, state-level RRB can invest in and adopt advanced technologies more easily. This will help improve operational performance and customer experience in rural areas.
Committees to Monitor Implementation
To ensure smooth implementation of this large-scale restructuring, the Centre has set up both state-level and national-level monitoring bodies. A State-Level Monitoring Committee (SLMC) and a National-Level Project Monitoring Unit (NLPMU) are overseeing the transition.
Additionally, NABARD (National Bank for Agriculture and Rural Development) has released a standard operating procedure (SOP) for the amalgamation. This SOP provides detailed steps for setting up Amalgamation Project Management Units (APMU), Steering Committees, and Functional Committees within each anchor RRB.
These committees are tasked with creating harmonised policies and operational guidelines for the merged entities and managing day-to-day integration.
Past Mergers Show Positive Results
The finance minister also cited a 2021 NABARD study, which reviewed the impact of previous RRB amalgamations. The study found that post-merger entities showed better financial performance and sustainability.
“Over time, the number of profit-making and viable RRBs has grown steadily, while the burden of accumulated losses as a percentage of total assets has come down,” the study noted.
Why This Matters
Regional Rural Banks play a vital role in providing banking and credit services to India’s rural population. By consolidating and streamlining them, the government aims to ensure that these institutions can operate more efficiently and cater to the needs of rural India more effectively.
The new structure will likely enable quicker decision-making, better customer service, and the adoption of digital banking tools in rural areas – all in line with the government’s financial inclusion goals.
Final Thoughts by TheTrendingPeople.com
The government’s push to simplify and strengthen the rural banking system under the ‘One State-One RRB’ principle reflects a long-term strategy for financial inclusion and rural empowerment. As the banking system becomes more integrated and tech-driven, the impact of these mergers on rural livelihoods and credit accessibility will be closely watched.