REGIONAL
RURAL BANKS: ECONOMY
NEWS: India
proposes merging regional rural banks to help them shore up capital, document
shows
WHAT’S
IN THE NEWS?
The
government plans a state-wise consolidation of Regional Rural Banks
(RRBs), reducing their number from 43 to 28 for better efficiency,
cost-saving, and resource optimization. This move aligns with a 'One
State-One RRB' vision, supported by NABARD and sponsor banks.
Consolidation
Plan
- Objective: Reduce 43 RRBs to 28
under a One State-One RRB model.
- Consultation: Developed with NABARD
and sponsor banks.
Goals
of Consolidation
- Benefits: Achieve scale
efficiencies, cost rationalization, and optimized technology use.
- Focus: Maintain RRBs’ local
connection with communities.
Background
and Stakeholders
- Previous Consolidations: Began in 2004-05,
reduced RRBs from 196 to 43.
- Ownership Structure: Central government (50%),
sponsor banks (35%), state governments (15%).
Example
of Amalgamation
- Andhra Pradesh: Consolidate four RRBs
into one under Canara Bank.
- West Bengal: Combine three RRBs
under Punjab National Bank (PNB).
Source:https://economictimes.indiatimes.com/industry/banking/finance/banking/india-proposes-merging-regional-rural-banks-to-help-them-shore-up-capital-document-shows/articleshow/114970610.cms