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In a significant move to improve the financial strength and operational efficiency of Regional Rural Banks (RRBs), the Government of India has successfully reduced the total number of RRBs from 196 in 2005 to just 28 as of May 1, 2025. This consolidation has been carried out under the ambitious ‘One State-One RRB’ policy.
The consolidation process, which began in 2005, was implemented in four distinct phases. The final phase (Phase-IV) was completed in May 2025, with the number of RRBs reduced from 43 to 28 across 26 States and 2 Union Territories, as per the Ministry of Finance notification dated April 5, 2025.
Aimed at enhancing profitability, simplifying management, and streamlining customer service delivery, the consolidation ensures that each RRB operates across a geographically contiguous region within a single state. According to the Reserve Bank of India and a NABARD-conducted study, merged RRBs have consistently shown improved viability, reduced accumulated losses, better leverage ratios, and enhanced capital adequacy.
Union Finance Minister Smt. Nirmala Sitharaman informed Parliament that amalgamated RRBs are now better positioned to invest in advanced technology platforms, reduce costs by eliminating administrative redundancies, and offer improved banking services in rural areas.
The government has also ensured safeguards for both employees and customers. A National Level Standard Operating Procedure (SOP) issued by NABARD outlines the protection of service conditions and inter-se seniority of staff, while State Level Monitoring Committees (SLMC) and the National Level Project Monitoring Unit (NLPMU) oversee the entire implementation.
Customer accounts, deposits, and loans are being migrated seamlessly to the new entities, with all existing branches continuing operations without disruption. Awareness campaigns and call centers have been set up to ensure that rural customers are well-informed and supported during the transition.
The consolidation drive marks a transformative step in strengthening rural banking infrastructure and promoting inclusive growth through better governance, capital adequacy, and digital integration.
