New Delhi, July 21 (IANS) The amalgamation of Regional Rural Banks (RRBs) has resulted in formation of a state-level RRB with contiguous area of operation leading to simplifying management and ease of service delivery, Finance Minister Nirmala Sitharaman said on Monday.

In a written reply to a question on the first day of the Parliament’s Monsoon Session, FM Sitharaman said that guided by the principle of ‘One State-One RRB’, the government continued with the process of further consolidation of RRBs in “Phase IV amalgamation” to achieve the benefits of scale efficiency and cost rationalisation, whereby number of RRBs has been reduced from 43 to 28 (with effect from May 1, 2025) in 26 states and 2 UTs.

“The RRBs have increased their capital base, enhancing the financial stability and resilience of the merged entity. By consolidating operations and eliminating redundancies on account of separate administrative structures, amalgamation is expected to lead to cost savings,” the finance minister informed.

Further, amalgamated RRBs can invest in and leverage advanced technology platforms, leading to improved operational efficiency and customer service, she mentioned in her reply in the Lok Sabha.

The government has constituted state-level monitoring committee (SLMC) and national-level project monitoring unit (NLPMU) to oversee and monitor the implementation of the amalgamation programme.

“NABARD has issued National Level Standard Operating Procedure (SOP), containing detailed guidelines, which, inter alia, advises setting up of Amalgamation Project Management Unit (APMU), Steering Committee and Functional Committees in every anchor/transferee RRB to finalise the harmonised policies and operational guidelines, and to handle day-to-day integration plan,” the finance minister noted in her reply.

A study on the impact of amalgamation of RRBs on their financial performance was undertaken by NABARD in 2021 and it was observed that the amalgamation process in the past had resulted in improved viability and financial performance of the RRBs.

The study revealed that during the different phases of amalgamation, the share of profitable and sustainably viable RRBs improved continuously and the quantum of accumulated losses as a percentage of total assets also declined

–IANS

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