RRB amalgamation: FinMin to hold review meeting with CEOs of PSU banks

The Finance Ministry is scheduled to hold a meeting with heads of public sector banks and chairpersons of Regional Rural Banks (RRBs) on January 30 to review their performance after amalgamation. The meeting would be chaired by Department of Financial Services Secretary M Nagaraju and likely to be attended by NABARD Chairman, SIDBI CMD and Executive Director concerned of Reserve Bank of India, sources said.

This is going to be the first high-level meeting after the fourth round of consolidation of RRBs effective May 1. This consolidation has reduced the number of RRBs to 28 from 43. According to sources, the meeting would review financial performance of RRBs after the amalgamation. It would review progress of priority sector lending and various financial schemes undertaken by RRBs.

On May 1, one State-owned RRB became a reality following the consolidation of 15 RRBs across 11 States to achieve better operational efficiency and cost rationalisation. In phase 1 (FY 2006 to FY 2010) the number of RRBs was reduced from 196 to 82. It was further brought down from 82 to 56 in phase 2 (FY 2013 - FY 2015) and in phase 3, it was reduced from 56 to 43. As per the published data, gross NPA ratio of RRBs declined to 5.4 per cent in March 2025 from a peak of 10.8 per cent in March 2019.

At the same time resilience increased with provision coverage ratio (PCR) of RRBs rising to 65.1 per cent from 40 per cent in March 2019. Capital adequacy of RRBs improved with Capital to Risk-Weighted Assets Ratio (CRAR) of 14.4 per cent as of March 2025. These banks were formed under the RRB Act, 1976, with the objective of providing credit and other facilities to small farmers, agricultural labourers and artisans in rural areas.

The Act was amended in 2015, whereby such banks were permitted to raise capital from sources other than the Centre, States and sponsor banks. Currently, the Centre holds a 50 per cent stake in RRBs, while 35 per cent and 15 per cent are with the concerned sponsor banks and State Governments, respectively. Even after stake dilution, the shareholding of the Centre and the sponsor public sector banks together cannot fall below 51 per cent, according to the amended Act.