The Union government has announced that 15 Regional Rural Banks (RRBs) across 11 states will be merged under the “One State, One RRB” policy. This move, aimed at streamlining rural banking services, will come into effect from May 1, 2025.
The new structure is aimed at improving the efficiency of the RRBs and minimising competition among the public sector banks for achieving better operational efficiency and cost rationalisation. With the fourth round of consolidation of regional rural banks (RRBs), the total number of RRBs operating across the country has been brought down from 43 to 28.
These banks collectively operate more than 22,069 branches, covering 700 districts, with nearly 92% of them located in rural and semi-urban areas. The states affected by this consolidation include Andhra Pradesh, Uttar Pradesh, West Bengal, Bihar, Gujarat, Jammu & Kashmir, Karnataka, Madhya Pradesh, Maharashtra, Odisha, and Rajasthan. Each state will now have a single RRB, combining existing ones into one entity per state, effective from May 1, 2025.
RRBs were originally set up under the RRB Act, 1976, to support small farmers, agricultural labourers, and artisans by providing access to credit and essential banking services in rural India. A key amendment to the Act in 2015 allowed these banks to raise capital from sources beyond the central and state governments and their sponsoring banks.
Among the sponsors, State Bank of India (SBI) backs the highest number of RRBs at 14, followed by Punjab National Bank with nine, and Canara Bank with four. Ownership of RRBs is currently divided with the central government holding 50%, sponsor banks holding 35%, and state governments owning the remaining 15%.
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