The government is going to start the process of integration of regional rural banks (RRBs)

The government is going to start the process of integration of regional rural banks (RRBs) along with public sector banks. The intention of the government is to reduce the number of RRB from the existing 56 to 36. A senior official of the Finance Ministry said that the Centre has started discussions with the states as they are also sponsors of regional rural banks in the country.

The official said that in addition to this, the sponsoring bank is outlining the merger of RRBs within one state.

This will increase the efficiency and productivity of RRB as well as improve the financial condition of these banks, improve financial inclusion and improve flow of credit in the rural areas.

Regional Rural Banks have been formed under RRB Act of 1976. The purpose behind their formation was to provide loans and other facilities to small farmers, agricultural laborers and artisans in rural areas. This law was amended in 2015. Under this, these banks were allowed to raise capital from other sources other than central, state governments and sponsoring banks.