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regular-article-logo Wednesday, 06 November 2024

Finance ministry plans to merge regional rural banks

According to the road map prepared by the finance ministry, in consultation with Nabard, 15 RRBs operating in various states would be merged, including Bengal

Our Bureau Calcutta Published 06.11.24, 12:08 PM
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The finance ministry plans to merge regional rural banks (RRBs) and bring down their number to 28 from 43 at present.

According to the road map prepared by the finance ministry, in consultation with Nabard, 15 RRBs operating in various states would be merged, including Bengal.

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The three operating RRBs in Bengal are Bangiya Gramin Vikash Bank, Paschim Banga Gramin Bank and Uttar Banga Kshatriya Gramin Bank.

“It is the felt need to embark on further consolidation of RRBs towards the goal of ‘One State-One RRB’ so as to derive the benefit of scale efficiency and cost rationalisation,” the department of financial services said.

The department has sought comments from the chiefs of sponsor banks of RRBs by November 20.

The Centre had initiated structural consolidation of RRBs in 2004-05, which reduced their number to 43 from 196 till 2020-21.

The RRB Act was amended in 2015 whereby such banks were permitted to raise capital from sources other than the Centre, states and sponsor banks.

The Centre holds 50 per cent of RRBs, while 35 per cent and 15 per cent are with the sponsor banks and the state governments, respectively.

Even after stake dilution, the shareholding of the Centre and the sponsor public sector banks together cannot fall below 51 per cent, according to the amended Act.

Earlier in June, two bank unions — AIBOC and AIBEA — had demanded the merger of RRBs with their respective sponsor banks.

“The RRBs should be merged with their sponsor banks. But any steps towards privatisation of RRBs will be opposed,” Rajen Nagar, president of the AIBEA, told The Telegraph.

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