The Reserve Bank of India (RBI), following the central government's "One State-One Regional Rural Bank (RRB)" policy, has accomplished the fourth stage of consolidation of RRBs. With effect from May 1, 2025, the RRBs count has been reduced from 43 to 28. These 28 merged banks will now operate in 26 states and two union territories, handling more than 22,000 branches spread over 700 districts.
The Ministry of Finance, in a social media post on platform X (formerly Twitter), explained that the step was intended to improve operational convenience, reduce administrative and operational expenses, and enhance digital services and credit penetration in rural and semi-urban regions. The amalgamation, it added, would enable RRBs to provide better financial products and services through digital channels, which would substantially enhance customer experience.
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This policy initiative is part of a larger, long-term restructuring program that started almost two decades back. The amalgamation of RRBs has been done in phases, each of which was meant to streamline operations, bring in better governance, and make the financials of these rural banks more robust. When the exercise started in the mid-2000s, there were 196 RRBs operating in the country.
During the initial phase, from FY2006 to FY2010, the number of RRBs was consolidated to 82 from 196. The second phase from FY2013 to FY2015 again cut down to 56. Then came the third phase in FY2019 to FY2021, which reduced the banks further to 43. The ongoing phase, the fourth, reduces the number to mere 28 banks, the biggest cut so far since the beginning of the reform process.
Here are the current 28 RRBs:
Andhra Pragathi Grameena Bank
Gramin Bank of Aryavart
Bangiya Gramin Vikash Bank
Assam Gramin Vikash Bank
Chaitanya Godavari Grameena Bank
Karnataka Grameena Bank
Kerala Gramin Bank
Maharashtra Gramin Bank
Madhya Pradesh Gramin Bank
Manipur Rural Bank
Meghalaya Rural Bank
Mizoram Rural Bank
Nagaland Rural Bank
Odisha Gramin Bank
Puduvai Bharathiar Grama Bank
Punjab Gramin Bank
Rajasthan Gramin Bank
Tamil Nadu Gramin Bank
West Bengal Grameena Bank
Bihar Grameena Bank
Gujarat Grameena Bank
Jammu & Kashmir Grameena Bank
Andhra Pradesh Grameena Vikas Bank
Jharkhand Rajya Gramin Bank
Paschim Banga Gramin Bank
Prathama UP Gramin Bank
Baroda Rajasthan Kshetriya Gramin Bank
Dakshin Bihar Gramin Bank
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The most recent merger encompasses RRBs across 11 states—Andhra Pradesh, Uttar Pradesh, West Bengal, Gujarat, Jammu & Kashmir, Karnataka, Madhya Pradesh, Maharashtra, Odisha, Rajasthan, and Tamil Nadu. One integrated RRB will now cater to each of these states, meeting the government's "One State-One RRB" target.
The government used its authority under Section 32A(1) of the Regional Rural Banks Act, 1976, to execute the consolidation. The notice mentioned that the merger is in the public interest, interest of the RRBs concerned, and the rural development objectives of the rural areas they operate in. Consolidating small and often financially weaker organisations into strong, stable larger organisations, the government aims to provide a stronger capital base, enhanced governance, and a broader product offering responsive to regional requirements.
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Regional Rural Banks are a key contributor to rural financial inclusion. They serve as a bridge in providing agricultural credit and other financial products to small and marginal farmers, artisans, and economically weak sections of society. As of March 31, 2024, about 70 per cent of RRB-disbursed credit went to the agricultural sector, and 64 per cent of this credit went to weaker sections of society.
On the strength aspect of finances, RRBs performed well during the previous financial year. The consolidated net worth of all RRBs was Rs 7,571 crore during FY2023-24, a record high. Their total deposits were Rs 6.6 lakh crore, which constituted 3.2 per cent of total deposits in all Indian banks. On the other side, RRBs had a total advance of Rs 4.7 lakh crore, or 2.9 per cent of total bank credit.
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The equity structure of RRBs does not change after the merger. The central government retains 50 per cent of the equity, the sponsor banks—typically nationalised banks—retain 35 per cent, and the respective state governments retain 15 per cent. Sponsor banks are expected to take a leading role in steering the newly consolidated entities, ensuring technology upgradation and digitalisation occur seamlessly across branches.
Through this merger of institutions, the government wants to see that every RRB will be well positioned to address region-specific credit requirements and invest more aggressively in technology infrastructure. A more robust capital base will also enable the RRBs to grow credit more aggressively, especially in underserved sectors and geographies.
