New Delhi, April 8: The Finance Ministry's Department of Financial Services has notified the amalgamation of 26 Regional Rural Banks (RRBs) on the principles of 'One State One RRB' as part of the fourth phase of the continuing exercise to improve efficiency, according to an official statement issued on Tuesday.

The Ministry of Finance had rolled out an amalgamation plan in November 2024 for consultation with stakeholders. After consultation with stakeholders, the amalgamation of 26 RRBs in 10 states and one UT has been carried out with the primary focus on the improvement in scale efficiency and cost rationalisation, the statement said.

At present, 43 RRBs are functioning in 26 states and 2 UTs. Post amalgamation, there will be 28 RRBs in 26 states and 2 UTs with more than 22,000 branches covering 700 districts. Their predominant area of operation is in rural areas, with approximately 92 per cent of branches in rural and semi-urban areas, the statement said.

This is the fourth phase of amalgamation. In the previous three phases which include Phase-I (FY 2006 to FY 2010), the number of RRBs were reduced from 196 to 82, in Phase-2 (FY 2013 to FY 2015) from 82 to 56, and in Phase-3 (FY 2019 to FY 2021) from 56 to 43, the official statement said.

The Finance Ministry has kicked off a 'One State One RRB' drive in 11 states, including Andhra Pradesh, Karnataka, Gujarat, West Bengal, and Rajasthan, by amalgamating various RRBs into one. The scheme will come into effect from May 1.

"In exercise of the powers conferred by sub-section (1) of Section 23A of the Regional Rural Banks Act, 1976, the Central government hereby provides for the amalgamation of the said Regional Rural Banks into a single Regional Rural Bank, which shall come into effect on and from the 1st day of May, 2025 with such constitution, property, powers, rights, interests, authorities and privileges; and with such liabilities, duties and obligation," a notification by the Finance Ministry said.

Regional Rural Banks in India play a crucial role in promoting rural economic development by providing financial services, particularly credit and other facilities, to small and marginal farmers, agricultural labourers, artisans, and small entrepreneurs in underserved rural areas. (IANS)

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