Big Reform: 26 RRBs Merged in 4th Phase Under ‘One State One RRB’ Model

The Department of Financial Services (DFS) has given the green light to merge 26 Regional Rural Banks (RRBs) into state‑level entities under the “One State One RRB” policy. This fourth phase of consolidation, effective 01 May 2025, reduces the total number of RRBs from 43 to 28. Spread across 26 states and two Union Territories, the merged banks will operate more efficiently, with over 22,000 branches serving roughly 700 districts, around 92% of them in rural and semi‑urban areas.

26 RRBs Merged in 4th Phase Under ‘One State One RRB’

As part of the fourth phase of the Regional Rural Banks (RRB) amalgamation process, 26 RRBs were merged into 11 new entities. This move is aligned with the ‘One State One RRB’ policy, which aims to strengthen the rural banking ecosystem by streamlining operations, reducing administrative overhead, and ensuring uniformity in service delivery. The mergers are expected to boost financial inclusion and improve credit flow to rural areas. The process also allows for better resource utilisation and technology integration across the merged banks.

Single new bank per state/UT: All RRBs in a state merge into one transferee bank.

Assets and liabilities transfer: Every branch, loan book, deposit, and legal obligation moves seamlessly to the new entity.

Capital structure: Each new bank has an authorised capital of ₹2,000 crore (200 crore shares of ₹10 each). The subscribed share capital equals the combined paid‑up capital of the predecessor banks.

Sponsor bank roles: The existing sponsor bank (for example, SBI, Punjab National Bank, Canara Bank, etc.) continues its support, with the head office located in a major city of the state or UT.

State-Wise RRB Merger

The RRB mergers were carried out across multiple states, with each newly formed RRB representing a consolidation of existing regional banks operating within that state. The state-wise distribution highlights how different RRBs were combined to form unified structures under the revised banking model.

RRB’s Equity Share Capital

The equity share capital of Regional Rural Banks is shared among the Central Government (CG), State Government (SG), and the Sponsor Bank. This distribution reflects the collaborative approach in managing and supporting RRBs, ensuring their financial stability and operational support. The updated share capital figures post-merger underline the continued commitment of all stakeholders in strengthening rural banking institutions.

Benefits of RRB Merger

Wider branch network: Customers gain access to more branches and ATMs across the state.

Uniform product offerings: Standardised loan schemes and deposit rates simplify customer choices.

Technology integration: Shared IT platforms mean faster transaction processing and better digital services.

Enhanced capital base: A stronger balance sheet allows for larger credit disbursements to farmers and small businesses.

RRB Merger History

Phase I (2006–10): RRBs cut from 196 to 82

Phase II (2013–15): Reduced from 82 to 56

Phase III (2019–21): Further trimmed from 56 to 43

Phase IV (2025): Now consolidated to 28 RRBs