+
RRB Amalgamation Reduces Numbers to 28, Boosts Viability
ECONOMY & POLICY

RRB Amalgamation Reduces Numbers to 28, Boosts Viability

To improve the operational viability of Regional Rural Banks (RRBs) and harness economies of scale, the Government of India initiated structural consolidation of RRBs in the financial year 2005-06.
During Phase I (2005-10), the number of RRBs was reduced from 196 to 82 by amalgamating RRBs sponsored by the same bank within a state. Phase II (2012-14) further reduced the number from 82 to 56 by amalgamating RRBs across different sponsor banks operating in geographically contiguous areas within a state. Phase III began in 2019, focusing on merging weaker RRBs with stronger ones, bringing the total number down from 56 to 43 by March 2021.
A 2021 NABARD study on the financial impact of these amalgamations showed improved viability and financial performance for RRBs. The Reserve Bank of India (RBI) published these findings in its Report on Trend and Progress of Banking in India (2020-21). The study revealed a continuous rise in the share of profitable and sustainable RRBs and a reduction in accumulated losses as a percentage of total assets. Improved profitability, coupled with capital infusion in weaker banks, boosted leverage and reserves-to-capital ratios.
Guided by the principle of ‘One State-One RRB’, the government has proceeded with Phase IV amalgamation to achieve scale efficiencies and cost rationalisation. As of 1 May 2025, the number of RRBs has been further reduced from 43 to 28 across 26 states and two union territories, as per the government notification dated 5 April 2025.
This consolidation has resulted in state-level RRBs with contiguous operational areas, simplifying management and improving service delivery. The merged entities have strengthened capital bases, enhancing financial stability and resilience. By eliminating administrative redundancies, amalgamation is expected to generate cost savings. Additionally, these consolidated banks can invest in advanced technology platforms, boosting operational efficiency and customer service.
The amalgamation was implemented based on audited financials as of 30 April 2025, with effect from 1 May 2025. The government has established a State Level Monitoring Committee (SLMC) and a National Level Project Monitoring Unit (NLPMU) to oversee the process.
NABARD has issued a National Level Standard Operating Procedure (SOP), providing detailed guidelines for the formation of Amalgamation Project Management Units (APMU), Steering Committees, and Functional Committees in each Anchor/Transferee RRB. These bodies finalise harmonised policies and manage day-to-day integration.
The government notification also ensures protection of existing employees’ remuneration and service conditions. Inter-se seniority of officers and staff follows NABARD’s SOP. To safeguard rural customers’ interests, NLPMU has directed RRBs to widely publicise the amalgamation through electronic and print media, SMS alerts, and branch-level awareness meetings. RRBs are also required to establish call centres to address customer grievances. According to NABARD, all branches remain operational under the new entities, with migration of customer accounts, deposits, and loans progressing without major disruptions.
This information was provided by Union Finance Minister Smt Nirmala Sitharaman in a written reply to a question in the Lok Sabha today. 

To improve the operational viability of Regional Rural Banks (RRBs) and harness economies of scale, the Government of India initiated structural consolidation of RRBs in the financial year 2005-06.During Phase I (2005-10), the number of RRBs was reduced from 196 to 82 by amalgamating RRBs sponsored by the same bank within a state. Phase II (2012-14) further reduced the number from 82 to 56 by amalgamating RRBs across different sponsor banks operating in geographically contiguous areas within a state. Phase III began in 2019, focusing on merging weaker RRBs with stronger ones, bringing the total number down from 56 to 43 by March 2021.A 2021 NABARD study on the financial impact of these amalgamations showed improved viability and financial performance for RRBs. The Reserve Bank of India (RBI) published these findings in its Report on Trend and Progress of Banking in India (2020-21). The study revealed a continuous rise in the share of profitable and sustainable RRBs and a reduction in accumulated losses as a percentage of total assets. Improved profitability, coupled with capital infusion in weaker banks, boosted leverage and reserves-to-capital ratios.Guided by the principle of ‘One State-One RRB’, the government has proceeded with Phase IV amalgamation to achieve scale efficiencies and cost rationalisation. As of 1 May 2025, the number of RRBs has been further reduced from 43 to 28 across 26 states and two union territories, as per the government notification dated 5 April 2025.This consolidation has resulted in state-level RRBs with contiguous operational areas, simplifying management and improving service delivery. The merged entities have strengthened capital bases, enhancing financial stability and resilience. By eliminating administrative redundancies, amalgamation is expected to generate cost savings. Additionally, these consolidated banks can invest in advanced technology platforms, boosting operational efficiency and customer service.The amalgamation was implemented based on audited financials as of 30 April 2025, with effect from 1 May 2025. The government has established a State Level Monitoring Committee (SLMC) and a National Level Project Monitoring Unit (NLPMU) to oversee the process.NABARD has issued a National Level Standard Operating Procedure (SOP), providing detailed guidelines for the formation of Amalgamation Project Management Units (APMU), Steering Committees, and Functional Committees in each Anchor/Transferee RRB. These bodies finalise harmonised policies and manage day-to-day integration.The government notification also ensures protection of existing employees’ remuneration and service conditions. Inter-se seniority of officers and staff follows NABARD’s SOP. To safeguard rural customers’ interests, NLPMU has directed RRBs to widely publicise the amalgamation through electronic and print media, SMS alerts, and branch-level awareness meetings. RRBs are also required to establish call centres to address customer grievances. According to NABARD, all branches remain operational under the new entities, with migration of customer accounts, deposits, and loans progressing without major disruptions.This information was provided by Union Finance Minister Smt Nirmala Sitharaman in a written reply to a question in the Lok Sabha today. 

Next Story
Infrastructure Transport

Lucknow Metro East-West Corridor Consultancy Contract Awarded

The Uttar Pradesh Metro Rail Corporation has awarded the first construction-related consultancy contract for the Lucknow Metro East West Corridor to a joint venture of AYESA Ingenieria Arquitectura SAU and AYESA India Pvt Ltd. The firm was declared the lowest bidder for the Detailed Design Consultant contract for Lucknow Metro Line-2 under Phase 1B and the contract was recommended following the financial bid. The contract is valued at Rs 159.0 million (mn), covering design services for the corridor. Lucknow Metro Line-2 envisages the construction of an 11.165 kilometre corridor connecting Cha..

Next Story
Infrastructure Urban

Div Com Kashmir Urges Fast Tracking Of Jhelum Water Transport Project

The Divisional Commissioner of Kashmir has called for the fast-tracking of the Jhelum water transport project, urging district administrations and relevant agencies to accelerate planning and clearances. In a meeting convened at the divisional headquarters, the commissioner instructed officials from irrigation, public health engineering and municipal departments to prioritise the project and coordinate survey and design work. The directive emphasised removal of administrative bottlenecks and close monitoring to ensure timely mobilisation of resources and contractors. Officials were told to in..

Next Story
Infrastructure Urban

Interarch Reports Strong Q3 And Nine Month Results

Interarch Building Solutions Limited reported unaudited results for the third quarter and nine months ended 31 December 2025, recording strong revenue growth driven by execution and a robust order book. Net revenue for the third quarter rose by 43.7 per cent to Rs 5.225 billion (bn), compared with Rs 3.636 bn a year earlier, reflecting heightened demand in pre-engineered building projects. The company’s total order book as at 31 January 2026 stood at Rs 16.85 bn, supporting near-term visibility. EBITDA excluding other income for the quarter increased by 43.2 per cent to Rs 503 million (mn),..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Open In App