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RRB Consolidation: The Finance Ministry has started the fourth phase of merger of Regional Rural Banks (RRBs), due to which the number of such banks is likely to reduce to 28 from the current 43. As per the blueprint prepared by the Finance Ministry, 15 RRBs in different states will be merged.
These banks will be merged
Merged RRBs in Andhra Pradesh (which has the highest number of four RRBs), Uttar Pradesh and West Bengal (three each) and Bihar, Gujarat, Jammu and Kashmir, Karnataka, Madhya Pradesh, Maharashtra, Odisha and Rajasthan (two each). Will go. In the case of Telangana, the merger of the Regional Rural Banks will be subject to division of the assets and liabilities of Andhra Pradesh Grameena Vikas Bank (APGVB) between APGVB and Telangana Grameena Bank.
What is extension?
In a letter sent to the heads of public sector banks, the Department of Financial Services said, “In view of the rural expansion and agro-climatic or geographical nature of Regional Rural Banks and to maintain the special feature of Regional Rural Banks i.e. their proximity to the communities. To achieve the goal of ‘One State – One Regional Rural Bank’, there is a need to further consolidate the Regional Rural Banks, so as to achieve greater efficiency and cost rationalization.”
Number of RRBs will be reduced to 28
The statement said a blueprint has been prepared in consultation with the National Bank for Agriculture and Rural Development (NABARD) for further consolidation, which will reduce the number of RRBs from 43 to 28. The Department of Financial Services has sought comments from heads of sponsor banks of regional rural banks by November 20. The Center had initiated structural consolidation of RRBs in 2004-05, resulting in reduction of the number of such entities from 196 to 43 by 2020-21 through three phases of merger.
Center's stake in RRB will be 50 percent
These banks were established under the RRB Act, 1976 with the objective of providing loans and other facilities to small farmers, agricultural laborers and artisans in rural areas. The Act was amended in 2015, allowing such banks to raise capital from sources other than central, state and sponsor banks. At present the Center holds 50 per cent stake in RRBs, while 35 per cent and 15 per cent stake are held by the respective sponsor banks and state governments respectively.