Second phase of RRB consolidation begins

Ten state level RRBs to be formed by December

The second phase of amalgamation of regional rural banks (RRB) is expecting to begin this month, with at least ten state level regional rural banks likely to be formed by December this year.

In November 2011, the government had said that geographically contiguous RRBs within a state could be amalgamated to form a single state level RRB. The amalgamation will create large state level RRBs, which would help optimize resources, achieve economies of scale and common technology platform.

The states in which the state-level RRBs are likely to be formed include, Assam, Uttaranchal, Jjarkhand, Chattisgarh, Kerala, Tamil Nadu, Himachal Pradesh, Haryana, Jammu & Kashmir and Punjab. Typically, RRBs with less than 100 branches are being merged under the process of amalgamation.

The process of amalgamation of RRBs in these ten states, to form a single state level RRB, was likely to be completed over the next two-three months, said Dilip Kumar Mukherjee, secretary general, All India Regional Rural Bank Employee Association (AIRRBEA).

There were 196 RRBs in the country as on 31st March, 2005. As per policy decision of the government of India, the amalgamation of RRBs stated from September, 2005 and the first phase of amalgamation was concluded in February, 2007. The number of RRBs, after the amalgamation, has come down to 82 from 196 earlier. Presently there are 46 amalgamated RRB and 36 stand alone RRBs.

At present, seven states, which includes, Tripura, Nagaland, Manipur, Mizoram, Arunachal Pradesh Meghalaya and Puducherry, have state-level RRBs.

This apart, states of Gujarat and Karnataka too have demanded formation of state level RRB. In case of West Bengal, the state Assembly took unanimous resolution in favour of State level RRB in the year 2004. The government was considering the proposal for state level RRB in West Bengal, said Mukherjee.

There are about four RRBs in the country, which are running in losses. The collective proceeds from the rest of the RRBs last year was close to Rs 2000 crore, said Mukherjee.