In April 2025, the Department of Financial Services (DFS), Ministry of Finance (MoF) announced ‘One State-One RRB’ through official notification for amalgamation of 26 Regional Rural Banks (RRBs) across 11 States which include 10 states and 1 Union Territory (UT), effective from May 01, 2025.
- Among states that will see consolidation of RRBs include Andhra Pradesh(AP), which has the maximum number of RRBs (4), Uttar Pradesh(UP) and West Bengal(WB) (3 each), and Bihar, Gujarat, Jammu & Kashmir(J&K), Karnataka, Madhya Pradesh(MP), Maharashtra, Odisha and Rajasthan (2 each).
- The merger of these RRBs is in line with the powers granted under Section 23A (1) of RRB Act, 1976. This also marks the 4th round of consolidation of RRBs, thereby reducing the number of RRBs from existing 43 to 28.
Note: The consolidation process was initiated in 2005, stemming from the recommendations of the Dr. Vyas Committee.
Key Points:
i.As per the notification, with the merger of these RRBs into a single entity, will inherit their respective properties, powers, rights, obligations, and duties.
ii.This large-scale level consolidation of RRBs aimed at improving the efficiency of these RRBs and minimizing competition among the public sector banks (PSBs) that sponsor them, as part of ‘One State-One RRB’.
iii.Each new RRB will function under the sponsorship of a major PSB and will have an authorised capital of Rs 2,000 crore.
Mergers of RRBs:
i.For AP: The merger of 4 RRBs namely, Chaitanya Godavari Grameena Bank, Andhra Pragathi Grameena Bank, Saptagiri Grameena Bank, and Andhra Pradesh Bank to Andhra Pradesh Grameen Bank.
- Headquarter: Amravati (AP)
- Name of Sponsored Bank: Mumbai (Maharashtra)-based Union Bank of India (UBI)
ii.For UP: The merger of 3 RRBs namely, Baroda UP Bank, Aryavrat Bank and Prathma UP Gramin Bank to ‘Uttar Pradesh Gramin Bank’.
- Headquarter: Lucknow (UP)
- Sponsored Bank: Vadodara (Gujarat)-based Bank of Baroda (BoB)
iii.For WB: The merger of 3 RRBs namely, Bangiya Gramin Vikas Bank, Paschim Banga Gramin Bank, and Uttarbanga Kshetriya Gramin Bank to ‘West Bengal Gramin Bank’ .
- Headquarter: Kolkata (WB)
- Sponsor Bank: New Delhi (Delhi)-based Punjab National Bank (PNB)
iv.For Bihar: The merger of 2 RRBs namely, Dakshin Bihar Gramin Bank, Uttar Bihar Gramin Bank to ‘Bihar Gramin Bank’.
- Headquarter: Patna (Bihar)and
- Sponsor Bank: PNB
v.For Maharashtra: The merger of 2 RRBs namely, Maharashtra Gramin Bank and Vidarbha Konkan Gramin Bank to ‘Maharashtra Gramin Bank’.
- Headquarter: Chhatrapati Sambhajinagar (Maharashtra)
- Sponsor Bank: Mumbai (Maharashtra)-based Bank of Maharashtra (BoM)
vi.For Rajasthan: The merger of 2 RRBs namely, Rajasthan Marudhara Gramin Bank and Baroda Rajasthan Kshetriya Gramin Bank to ‘Rajasthan Gramin Bank’.
- Headquarter: Jaipur (Rajasthan)
- Sponsor Bank: Mumbai (Maharashtra)-based Bank of India (BoI)
vii.For Odisha: The merger of 2 RRBs namely, Odisha Gramya Bank and Utkal Grameen Bank to ‘Odisha Grameen Bank’.
- Headquarter: Bhubaneswar (Odisha)
- Sponsor Bank: Chennai (Tamil Nadu, TN)-based Indian Overseas Bank (IOB)
viii.For Karnataka: The merger of 2 RRBs namely, Karnataka Vikas Grameena Bank and Karnataka Gramin Bank to ‘Karnataka Grameena Bank’.
- Headquarter: Ballari (Karnataka)
- Sponsor Bank: Bengaluru(Karnataka)-based Canara Bank Limited.
ix.For MP: The merger of 2 RRBs namely, Madhya Pradesh Gramin Bank and Madhyanchal Gramin Bank to ‘Madhya Pradesh Gramin Bank’.
- Headquarter: Indore (MP)
- Sponsor Bank: BoI
x.For Gujarat: The merger of 2 RRBs namely, Baroda Gujarat Gramin Bank and Saurashtra Gramin Bank to ‘Gujarat Gramin Bank’.
- Headquarter: Vadodara (Gujarat)
- Sponsor Bank: BoB
xi.For UT J&K: The merger of 2 RRBs namely, J&K Grameen Bank and Ellaquai Dehati Bank to ‘Jammu & Kashmir Grameen Bank’.
- Headquarter: Jammu (J&K)
- Sponsor Bank: Jammu (J&K)-based Jammu and Kashmir Bank Limited
About RRBs:
i.These banks were constituted under the RRB Act, 1976, with an objective to facilitate credit and other facilities to small farmers, agricultural labourers and artisans in rural areas of the country.
- These RRBs are regulated by RBI under RRB Act 1976 and the Banking Regulation Act, 1949; and are supervised by Mumbai (Maharashtra)-based National Bank for Agriculture and Rural Development (NABARD).
ii.The Act was amended in 2015, which had allowed RRBs to raise capital from sources other Government of India (GoI), states and sponsor banks.
iii.At present, 3 entities hold shareholding in RRBs: GoI (50%), sponsor PSBs (35%) and concerned state government (15%).
- As per RRB Amended Act, the combined shareholding of the GoI and the sponsor PSBs cannot be less than 51%, even after stake dilution.
Key Facts about RRB:
i.During FY24, RRBs reported the highest ever consolidated net profit of Rs 7,571 crore and their consolidated Capital Adequacy Ratio (CAR) was at an all-time high of 14.2% (as on March 31, 2024).
- While, their Gross Non-Performing Assets (GNPA) at 6.1% was the lowest in the last 10 years.
ii.The structural consolidation of RRBs was initiated by GoI in 2004-05, which resulted in reduction of such banks from 196 to 43 till 2020-21, through 3 phases of amalgamation.
iii.As of March 2025, 43 RRBs are currently operating across 26 states and 3 UTs (Puducherry, J&K, and Ladakh) of the country.
Recent Related News:
In March 2025, Mumbai (Maharashtra)-based National Bank for Agriculture and Rural Development (NABARD), Jammu & Kashmir (J&K) Regional Office based in Jammu, J&K, has signed a Memorandum of Understanding (MoU) with Jammu (J&K)-based J&K Grameen Bank for the promotion and financing of 2,000 Joint Liability Groups (JLGs).
- It will facilitate a promotional grant support of Rs 4,000 to each JLG through J&K Grameen Bank, bolstering financial empowerment in the region.
