Government to implement 'One State, One RRB' policy from May 1, 2025
As part of the Union finance ministry's "One State, One RRB" policy—which Business Standard first reported on in September 2024—the new structure aims to increase the RRBs' efficiency and reduce competition among the public sector banks that sponsor them.
On Monday, a gazetted notice announcing the merger of multiple Regional Rural Banks (RRBs) with effect from May 1, 2025, was issued by the Union government. According to the notification, these RRBs will combine into a single organisation and inherit their individual properties, powers, rights, obligations, and duties in accordance with the authority granted by Section 23A(1) of the Regional Rural Banks Act, 1976.
As part of the Union Finance Ministry's "One State, One RRB" policy—which Business Standard first reported on in September 2024—the new structure aims to increase the RRBs' efficiency and reduce competition among the public sector banks that sponsor them.
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In order to create bigger, more reliable regional institutions, the notification describes the merger of multiple banks from various states. With its headquarters located in Amravati and supported by Union Bank of India, the Andhra Pradesh Grameena Bank will be formed by the merger of Chaitanya Godavari Grameena Bank, Andhra Pragathi Grameena Bank, Saptagiri Grameena Bank, and Andhra Pradesh Grameena Vikas Bank.
In Bihar, Dakshin Bihar Gramin Bank and Uttar Bihar Gramin Bank will be merged into Bihar Gramin Bank, headquartered in Patna, sponsored by Punjab National Bank. In Gujarat, Baroda Gujarat Gramin Bank and Saurashtra Gramin Bank will merge to form Gujarat Gramin Bank, with its head office in Vadodara, sponsored by Bank of Baroda.
Similarly, Jammu & Kashmir will see the merging of J&K Grameen Bank and Ellaquai Dehati Bank into Jammu and Kashmir Grameen Bank, headquartered in Jammu, and sponsored by Jammu and Kashmir Bank Ltd. In Karnataka, Karnataka Vikas Grameena Bank and Karnataka Gramin Bank will merge into Karnataka Grameena Bank, with its head office in Ballari, sponsored by Canara Bank. In Madhya Pradesh, Madhya Pradesh Gramin Bank and Madhyanchal Gramin Bank will combine to form Madhya Pradesh Gramin Bank, headquartered in Indore, and sponsored by Bank of India.
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In Rajasthan, Rajasthan Marudhara Gramin Bank and Baroda Rajasthan Kshetriya Gramin Bank will merge to form Rajasthan Gramin Bank, headquartered in Jaipur, under the sponsorship of State Bank of India. In Uttar Pradesh, Baroda UP Bank, Aryavart Bank, and Prathama UP Gramin Bank will be combined into Uttar Pradesh Gramin Bank, with its head office in Lucknow, and sponsored by Bank of Baroda.
Further, in West Bengal, Bangiya Gramin Vikash Bank, Paschim Banga Gramin Bank, and Uttarbanga Kshetriya Gramin Bank will be merged into West Bengal Gramin Bank, headquartered in Kolkata, and sponsored by Punjab National Bank.
It is anticipated that this significant merger will strengthen the RRBs' financial position, simplify operations, and increase their capacity to provide better services to rural communities. A significant public sector bank will sponsor each new RRB, guaranteeing increased operational effectiveness and financial stability.
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