Ministry of Finance has started the fourth phase of merger of Regional Rural Banks (RRBs), which is likely to reduce the number of such banks to 28 from 43 at present. According to the blueprint prepared by the Finance Ministry, 15 regional rural banks in different states will be merged. RRBs were merged in Andhra Pradesh (which has the maximum 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.
'One State-One Regional Rural Bank'
In the case of Telangana, the merger of 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. 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 closeness to the communities.” “In order to achieve the goal of 'One State-One Regional Rural Bank', a need is felt to further consolidate the Regional Rural Banks to achieve greater efficiency and cost rationalization benefits.”
Blueprint prepared in consultation with NABARD
A blueprint for further consolidation has been prepared in consultation with the National Bank for Agriculture and Rural Development (NABARD), which will reduce the number of RRBs from 43 to 28, the statement said. 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 institutions from 196 to 43 by 2020-21 through three phases of merger. 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. This Act was amended in 2015 under which such banks were allowed to raise capital from sources other than central, state and sponsor banks. The Center currently holds 50 per cent stake in RRBs, while 35 per cent and 15 per cent are held by the respective sponsor banks and state governments respectively.
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