New Delhi: The amalgamation of 26 Regional Rural Banks (RRBs) across 11 states and Union Territories officially came into effect on Thursday, 1 May, marking the fourth phase of consolidation aimed at strengthening rural banking infrastructure and enhancing financial inclusion.
Announcing the implementation, the Department of Financial Services (DFS) under the Ministry of Finance said the move is a “significant step toward strong RRBs, better governance, improved credit flow and financial inclusion.”
The restructuring is based on the principle of ‘One State, One RRB’ and follows the notification issued by DFS on 8 April.
The latest consolidation reduces the number of RRBs to 28 across 26 states and two Union Territories, with more than 22,000 branches serving nearly 700 districts.
Of these, around 92 per cent are located in rural and semi-urban areas, reinforcing the banks’ primary mandate to serve India’s agrarian economy and rural population.
The merger exercise is part of a phased strategy by the government to improve scale efficiency and reduce operational costs.
The first three phases saw the number of RRBs reduced from 196 in 2006 to 43 by 2021. The current phase, initiated after stakeholder consultations in November 2024, further streamlines operations to align with the changing financial landscape.
Originally set up in 1975, RRBs play a crucial role in extending credit and other banking services to small and marginal farmers, agricultural labourers, artisans and small entrepreneurs in rural areas.
The ongoing restructuring is expected to improve their capacity and reach in supporting the rural economy.
Discussion about this post