As per the sources, One State One RRB policy may be implemented by the end of financial year 2025. The government has started the process of merger of RRBs within a state. The Centre is bringing stakeholders on board and aims to complete the process by the end of FY25. This will be done across the states and RBI, NABARD have started devising plans to implement the policy.
The Union Ministry of Finance is working on a new plan called the “One State, One RRB” policy to bring together the Regional Rural Banks (RRBs) in each state. The main aim of this policy is to improve how these banks operate and prevent too much competition between public sector banks that support RRBs.
What is the “One State, One RRB” Policy?
At present, there are 43 RRBs spread across different states. The government is considering reducing this number to around 30. Under this plan, all RRBs within a state will merge into a single entity, sponsored by one public sector bank. This will simplify banking operations and allow each state to have just one sponsor bank for all its rural banking needs.
Why is This Change Important?
According to a senior government official, the focus isn’t on the number of RRBs but rather on improving the quality of banking services. The official highlighted that better technology, including the growth of mobile banking, is needed to enhance customer experience. By implementing the “One State, One RRB” policy, the government hopes to:
- Increase efficiency in rural banking operations.
- Improve the quality of services offered by RRBs.
- Reduce unnecessary competition between RRBs backed by different sponsor banks.
How Will It Work?
Each state will have one sponsor bank that will oversee and absorb the smaller RRBs. The performance of the banks will be considered before deciding on the sponsor bank for each state. This merger is expected to streamline operations, reduce administrative costs, and lead to better customer service, especially in rural areas.
Conclusion
The government’s move to consolidate RRBs under the “One State, One RRB” policy reflects its commitment to improving rural banking in India. By focusing on better technology and reducing competition, this policy aims to ensure that people in rural areas get faster, more reliable banking services, which will ultimately help in promoting financial inclusion across the country.
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