Lok Sabha Question No. 10 (STARRED), answered on 2025-07-21
Subject: Amalgamation of Regional Rural Banks (RRBs)
Ministry: FINANCE
Asked by: Shri Jagdambika Pal, Shri Shankar Lalwani

## Govemment  of India Ministry of Finance

## Department of Financial  Services

## LOKSABHA Starred  Question  No.  *10

## ANSWERED ON MONDAY, 2I JULY, 2025/ 30 ASHADHA,  1947 (SAKA)

## Amalgamation of Regional Rural Banks (RRBs)

- t*  10.  Shri Shankar Lalwani:

Shri Jagdambika  Pal:

Will the Minister of FINANCE  be pleased to state:

- (a) whether the amalgamation ofRegional  Rural Banks (RRBs) has enhanced their operational efficiency  and financial stability;
- (b) if so, the details  thereof;
- (c) the timeline  and fiamework fxed for monitoring the implementation  of this amalgamation; and
- (d) the steps  taken  to protect the interests of existing  RRB employees and rural customers during  and after the said amalgamation  process?

## Answcr

THE FINANCE MINISTER (SMT.  NIRMALA SITHARAMAN)

- (a) to (d): A statement  is laid on the Table ofthe  House

Statement referred in reply to parts (a) to (d) ofLok Sabha Starred  Question  No, *10  to be answered  on 21.07.2025 regarding  'Amalgamation  of Regional Rural Banks (RRBS)' by Shri Shankar Lalwani  and Shri Jagdambika Pal:

(a) and (b): In order to improve operational viability  of Regional Rural Banks (RRBs)  and to take advantage  of economies  of scale, Govemment  of India initiated struchrral consolidation of RRBs in FY 2005-06.  In Phase-I amalgamation  (2005-2010),  the number  of RRBs was brought down from 196 to 82 by amalgamating RRBs  of the same Sponsor Bank  within  a State. In Phase-II amalgamation  (2012-14),  the number of RRBs was brought  down from 82 to 56, by amalgamating  RRBs across Sponsor  Banks within a State with geographically  contiguous areas of operation.  Phaselll  amalgamation  was initiated  in the year 2019 by amalgamating weaker  RRB with the stronger RRB. As a result  of Phaselll amalgamation,  the number  of RRBs were brought down from 56 to 43 at the end-March  2021.

A study on the impact  of amalgamation of RRBs on their financial  performance  was undertaken by NABARD in 2021 and it was observed that the amalgamation  process in the past had resulted in irnproved  viability  and financial performance  of the RRBs.  Findings  of the study were published  by Reserve  Bank of India (RBI) in their Statutory  Publication on 'Report on Trend and Progress of Banking in India (2020-2021).

The srudy revealed  that during the different  phases of amalgamation,  the share of profitable and sustainably viable RRBs  improved  continuously  and the quanhrm of accumulated losses as a percentage of total assets also declined.  Improved  profitability of RRBs post amalgamation,  coupled with capital infusion  in weak banks, boosted their leverage ratio, as well as the reserves to capital  ratio.

Guided by the principle of 'One State-One  RI{B', the Govemment  continued with the process of further consolidation  of RRBs  in PhaselV amalgamation  to achieve the benefits of scale efficiency and cost-rationalisation,  whereby number ofRRBs has been  reduced  from 43 to 28 w.e.f. 01.05.2025, in 26 states and 2 UTs, vide GoI notification  dated 05.04.2025.

Amalgamation  of RRBs  has resulted  in formation  of a state level RRB with contiguous area of operation  leading  to simplifuing management  and ease of service  delivery. The RRBs have increased their capital  base,  enhancing  the financial stability and resilience  of the merged entity.  By consolidating  operations  and eliminating redundancies  on account of separate administrative structures,  amalgamation  is expected  to lead to cost savings.  Further, amalgamated  RRBs can invest in and leverage advanced technology platforms,  leading to improved  operational efficiency and customer service.

(c) The amalgamation  of RRBs,  guided  by the principle  of 'One State-One  RRB', has been carried  out based on the audited financials as on 30.04.2025  with effective  date of amalgamation as 01.05.2025. The Govemment  has constituted  State Level Monitoring Committee (SLMC) and National  Level Project Monitoring Unit (NLPMU)  to oversee and monitor the implementation  of the amalgamation programme.

NABARD has issued National  Level Standard Operating Procedure  (SOP), containing  detailed guidelines, which, inter alia, advises setting  up of Amalgamation Project  Mamgement Unit (APMU), Steering Committee and Functional  Committees in every Anchor/Transferee  RRB to finalise the harmonised  policies and operational guidelines, and to handle day-to-day integration  plan.

(d) The GoI Notification  of amalgamation,  inter alio, provides  for protection  of the remuneration and conditions  of service  of the existing  RRBs employees.  The inter-se  seniority of officers and employees  are guided by the National Level SOP issued by the NABARD.  To protect the interest  of rural customers, the NLPMU  has advised all RRBs to give adequate publicity  of amalgamation through various communication  channels  (electronic  & print media, SMS to customers,  customer awareness meets at branch level etc). Further,  RRBs have been advised to take necessary steps to set up call centres  to handle customer grievances.  As informed  by NABARD, all branches continue to frmction under the new entities, ensuring uninterrupted  access to banking  services.  Migration  of customer accounts,  deposits,  and loans is being carried out without any major  disruption.

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