Bank Merger: From May 1, only one Regional Rural Bank (RRB) will be present in every state of the country. To implement this proposal, the Finance Ministry has issued a notification regarding the integration of 15 Regional Rural Banks in 11 states. This will be the fourth phase of integration of Regional Rural Banks, after which the number of RRBs will be reduced from the current 43 to 28.
One state one RRB: From May 1, only one Regional Rural Bank (RRB) will be present in every state of the country. To implement this proposal, the Finance Ministry has issued a notification regarding the integration of 15 Regional Rural Banks in 11 states. This will be the fourth phase of integration of Regional Rural Banks, after which the number of RRBs will be reduced from the current 43 to 28.
Merger approved in 11 states
According to the notification of the Finance Ministry, the Regional Rural Banks present in 11 states of the country – Andhra Pradesh, Uttar Pradesh, West Bengal, Bihar, Gujarat, Jammu and Kashmir, Karnataka, Madhya Pradesh, Maharashtra, Odisha and Rajasthan will be merged into one unit. In this way, the goal of ‘one state-one RRB’ will be realized.
Which banks will be merged
According to the notification, the effective date for the merger of these regional rural banks has been fixed as May 1, 2025. In accordance with the powers conferred under Section 23A (1) of the Regional Rural Banks Act, 1976, these RRBs will be integrated into a single entity. In the same sequence, Chaitanya Godavari Gramin Bank, Andhra Pragati Gramin Bank, Saptagiri Gramin Bank and Andhra Pradesh Gramin Vikas Bank sponsored by Union Bank of India, Canara Bank, Indian Bank and State Bank of India will be merged to form Andhra Pradesh Gramin Bank.
3-3 banks will be merged in UP and Bengal
Three RRBs each in Uttar Pradesh and West Bengal will also be merged into a single entity. Baroda UP Bank, Aryavart Bank and Prathama UP present in Uttar Pradesh. The Gramin Bank has been merged into an entity called Uttar Pradesh Gramin Bank, which will be headquartered in Lucknow under the sponsorship of Bank of Baroda.
Bangiya Gramin Vikas, West Bengal Gramin Bank and North Bengal Regional Rural Bank operating in West Bengal will be merged into West Bengal Gramin Bank. Apart from this, two RRBs each will be merged in eight states of the country – Bihar, Gujarat, Jammu and Kashmir, Karnataka, Madhya Pradesh, Maharashtra, Odisha and Rajasthan. South Bihar Gramin Bank and North Bihar Gramin Bank will be merged to form Bihar Gramin Bank, which will be headquartered in Patna.
Baroda Gujarat Gramin Bank and Saurashtra Gramin Bank will be merged
In Gujarat, Baroda Gujarat Gramin Bank and Saurashtra Gramin Bank will be merged to form Gujarat Gramin Bank. According to the notification, all regional rural banks will have an authorized capital of Rs 2,000 crore. The government has also infused capital in these regional rural banks before the merger.
In the financial year 2021-22, the Center had decided to infuse Rs 5,445 crore in RRB as its share over a period of two years. In FY 2023-24, the performance of RRBs reached historic highs on several parameters. RRBs recorded the highest ever consolidated net profit of Rs 7,571 crore that year and their consolidated capital adequacy ratio was at an all-time high of 14.2 per cent.
The Central Government had initiated the structural integration of RRBs in FY 2004-05. In this regard, in the three phases conducted so far, the number of such institutions had come down from 196 to 43 by 2020-21. Regional Rural Banks were constituted under the RRB Act, 1976. The purpose of their formation was to provide loans and other facilities to small farmers, agricultural laborers and artisans in rural areas.
