The Finance Ministry is set to soon implement the ‘One State-One RRB’ plan. This will enhance operational efficiency, reduce costs, and consolidate the number of Regional Rural Banks (RRBs) from 43 to 28.
According to sources, most of the groundwork for the consolidation has already been completed, and the fourth phase of mergers will begin soon. As per the ministry’s roadmap, 15 RRBs operating across various states will be merged.
States identified for consolidation include Andhra Pradesh—which currently has the highest number of RRBs (4)—along with Uttar Pradesh and West Bengal (3 each), and Bihar, Gujarat, Jammu & Kashmir, Karnataka, Madhya Pradesh, Maharashtra, Odisha, and Rajasthan (2 each).
In Telangana, the bifurcation of assets and liabilities between Andhra Pradesh Grameena Vikas Bank (APGVB) and Telangana Grameena Bank has been concluded, clearing the way for further consolidation.
To prepare for the mergers, capital infusion has already been carried out in these banks. The financial year 2021–22 marked a turning point for RRBs, as the Centre committed to infusing Rs 5,445 crore as its share over two years to strengthen their capital base.
Against this backdrop, RRBs recorded significant performance improvements in 2023–24, posting their highest-ever consolidated net profit of Rs 7,571 crore. Their capital adequacy ratio also reached a record 14.2% as of March 31, 2024, while asset quality, measured by Gross Non-Performing Assets (GNPA), stood at a decade-low 6.1%.
The process of structural consolidation began in 2004–05, reducing the number of RRBs from 196 to 43 by 2020–21 through three phases of amalgamation.
Established under the Regional Rural Banks Act, 1976, RRBs were created to provide credit and financial services to small farmers, agricultural workers, and rural artisans. A key amendment to the Act in 2015 allowed RRBs to raise capital from sources other than the Centre, state governments, and sponsor banks.
Currently, the Central Government holds a 50% stake in each RRB, while sponsor banks and state governments hold 35% and 15%, respectively. Even with future stake dilution, the combined shareholding of the Centre and sponsor public sector banks must not fall below 51%, as per the amended legislation.
As of March 31, 2024, the 43 RRBs operate a network of 22,069 branches across 26 states and 3 Union Territories—Puducherry, Jammu & Kashmir, and Ladakh—serving 700 districts. These banks are increasingly embracing technology, with more RRBs offering digital services to their rural customer base.
RRB Proposed Merger List
| State | Bank Name | Sponsor Bank | Proposed |
| Sponsor Bank | |||
| Andhra Pradesh | Andhra Pragathi Grameena Bank | Canara Bank | Canara Bank |
| Chaitanya Godavari Grameena Bank | Union Bank of India | ||
| Saptagiri Grameena Bank | Indian Bank | ||
| Andhra Pradesh Grameena Vikas Bank | State Bank of India | ||
| Telangana | Andhra Pradesh Grameena Vikas Bank | State Bank of India | State Bank of India |
| Telangana Grameena Bank | State Bank of India | ||
| Assam | Assam Gramin Vikash Bank | Punjab National Bank | Punjab National Bank |
| Arunachal Pradesh | Arunachal Pradesh Rural Bank | State Bank of India | State Bank of India |
| Bihar | Uttar Bihar Gramin Bank | Central Bank of India | Punjab National Bank |
| Dakshin Bihar Gramin Bank | Punjab National Bank | ||
| Chhattisgarh | Chhattisgarh Rajya Gramin Bank | State Bank of India | State Bank of India |
| Gujarat | Saurashtra Gramin Bank | State Bank of India | Bank of Baroda |
| Baroda Gujarat Gramin Bank | Bank of Baroda | ||
| Haryana | Sarva Haryana Gramin Bank | Punjab National Bank | Punjab National Bank |
| Himachal Pradesh | Himachal Pradesh Gramin Bank | Punjab National Bank | Punjab National Bank |
| Jharkhand | Jharkhand Rajya Gramin Bank | State Bank of India | State Bank of India |
| Jammu & Kashmir | J&K Grameen Bank | J&K Bank Ltd. | J & k Bank |
| Ellaquai Dehati Bank | State Bank of India | ||
| Karnataka | Karnataka Gramin Bank | Canara Bank | Canara Bank |
| Karnataka Vikas Grameena Bank | Canara Bank | ||
| Kerala | Kerala Gramin Bank | Canara Bank | |
| Maharashtra | Maharashtra Gramin Bank | Bank of Maharashtra | Bank of Maharashtra |
| Vidharbha Konkan Gramin Bank | Bank of India | ||
| Madhya Pradesh | Madhya Pradesh Gramin Bank | Bank of India | Bank of India |
| Madhyanchal Gramin Bank | State Bank of India | ||
| Manipur | Manipur Rural Bank | Punjab National Bank | Punjab National Bank |
| Meghalaya | Meghalaya Rural Bank | State Bank of India | State Bank of India |
| Mizoram | Mizoram Rural Bank | State Bank of India | State Bank of India |
| Nagaland | Nagaland Rural Bank | State Bank of India | State Bank of India |
| Orissa | Utkal Grameen Bank | State Bank of India | Indian Overseas Bank |
| Odisha Gramya Bank | Indian Overseas Bank | ||
| Punjab | Punjab Gramin Bank | Punjab National Bank | Punjab National Bank |
| Puducherry | Puduvai Bharathiar Grama Bank | Indian Bank | Indian Bank |
| Rajasthan | Baroda Rajasthan Kshetriya Gramin Bank | Bank of Baroda | Bank of Baroda |
| Rajasthan Marudhara Gramin Bank | State Bank of India | ||
| Tamilnadu | Tamil Nadu Grama Bank | Indian Bank | Indian Bank |
| Tripura | Tripura Gramin Bank | Punjab National Bank | |
| Uttar Pradesh | Aryavart Bank | Bank of India | Bank of Baroda |
| Baroda UP Bank | Bank of Baroda | ||
| Prathama UP Gramin Bank | Punjab National Bank | ||
| Uttarakhand | Uttarakhand Gramin Bank | State Bank of India | State Bank of India |
| West Bengal | Bangiya Gramin Vikash Bank | Punjab National Bank | Punjab National Bank |
| Paschim Banga Gramin Bank | UCO Bank | ||
| Uttar Banga Kshetriya Gramin Bank | Central Bank of India |
Lobbying by NODAL AGENCY OF RRBs Playing role for selection of Sponsor bank for AP. Since the chief of Nodal agency worked with that sponsor bank.
1. Merging RRBs may dilute their local character and disconnect them from regional needs.
2. It risks operational disruption during the transition phase.
3. Staff restructuring may lead to job losses or forced transfers.
4. Rural branch closures could reduce access to banking in remote areas.
5. A single RRB model may not suit diverse intra-state rural needs.
6. Technological integration of varied systems will be costly and complex.
7. Organizational culture clashes may affect staff morale and efficiency.
8. Centralized decision-making could delay responses to local issues.
9. The merger process involves heavy financial and legal complications.
10. Sponsor banks may face a financial burden due to harmonization efforts.
11. Farmers and SHGs may suffer disruptions in credit access and services.
12. Legal challenges and stakeholder opposition could stall implementation.
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