Big Bank Reforms: Modi Government Consults States Over Merger Of RRBs

The Narendra Modi government has initiated discussions with state governments to bring down the number of regional rural banks (RRBs) from 56 to 36 by consolidating some of the RRBs, Economic Times has reported.

The consolidation exercise of RRBs has been a continuous one since 2006 when their numbers were brought down to 133 from 196. By 2012, the number of RRBs was 82 before the tally was brought down to 56.

The Centre holds 50 per cent of the stake in RRBs while sponsor banks and state governments have a stake of 35 per cent and 15 per cent respectively. These banks were formed under RRB Act, 1976, with an objective to provide credit and other facilities to small farmers, agricultural labourers and artisans.

The Act was amended in 2015 in order to raise capital from other sources as well. However, the government has to retain a stake of more than 51 per cent at all times.