Government Merges RRBs into 28 Banks to Boost Efficiency and Rural Banking Services
- Number of RRBs reduced from 43 to 28 under the ‘One State-One RRB’ policy to enhance scale efficiency and service delivery.
- Amalgamation strengthens capital base, cuts administrative costs, and enables better tech adoption.
- NABARD study confirms improved profitability and reduced losses post previous RRB mergers.
In a major step toward streamlining rural banking operations, the Central Government has consolidated the number of Regional Rural Banks (RRBs) in India from 43 to 28, effective from May 1, 2025. This reduction, carried out under the Phase IV amalgamation plan, adheres to the 'One State-One RRB' principle and spans 26 states and two union territories.
Finance Minister Nirmala Sitharaman, in a written reply in the Lok Sabha during the Monsoon Session of Parliament, said the amalgamation aims to simplify management, improve service delivery, and unlock benefits of scale efficiency and cost rationalisation.
"The RRBs have increased their capital base, enhancing the financial stability and resilience of the merged entities. Consolidation has eliminated redundancies in administrative structures, leading to significant cost savings", Sitharaman noted. She further highlighted that the move enables the merged RRBs to invest in and leverage advanced technology platforms for improved operational efficiency and customer experience.
To ensure smooth implementation, the government has set up a State-Level Monitoring Committee (SLMC) and a National-Level Project Monitoring Unit (NLPMU). NABARD has issued a National Level Standard Operating Procedure (SOP), which outlines the formation of Amalgamation Project Management Units (APMU), Steering Committees, and Functional Committees in each anchor/transferee RRB to finalize harmonized policies and operational guidelines.
A NABARD study conducted in 2021 on the impact of previous RRB amalgamations showed a positive trend. It found that the share of profitable and sustainably viable RRBs increased across various amalgamation phases, while the proportion of accumulated losses to total assets significantly declined.
The government believes that with stronger capital bases, tech-enabled systems, and leaner administration, the new structure will better serve India’s rural economy and drive inclusive financial growth.
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