Finance Minister Nirmala Sitharaman has informed Parliament that the number of Regional Rural Banks in India has been reduced from 43 to 28, effective May 1, 2025, as part of Phase IV of the government’s amalgamation programme. The consolidation, based on the principle of “One State–One RRB,” is aimed at simplifying management, achieving scale efficiency, and delivering services more effectively across 26 states and two union territories.
Sitharaman stated that the merged entities now operate with contiguous territorial coverage, which has increased their capital base and improved financial resilience. The move is expected to generate significant cost savings by eliminating administrative redundancies and streamlining operations.
The Finance Minister highlighted that the newly amalgamated banks are now better positioned to invest in advanced technology platforms, which are crucial for improving customer service and operational efficiency in rural financial delivery systems.
To oversee the integration process, the government has constituted a state-level monitoring committee and a national-level project monitoring unit. The National Bank for Agriculture and Rural Development has issued a Standard Operating Procedure containing comprehensive guidelines for each anchor or transferee RRB. These include the establishment of Amalgamation Project Management Units, Steering Committees and Functional Committees to finalize harmonized policies and manage day-to-day implementation.
Sitharaman cited a 2021 NABARD study evaluating the impact of previous RRB amalgamations, which found sustained improvement in the financial viability of the institutions. The proportion of profitable and sustainably viable banks increased, while accumulated losses as a percentage of total assets showed a consistent decline across the different consolidation phases.
The Finance Minister emphasized that the current phase of amalgamation continues this trajectory, reflecting a policy shift from fragmented rural banking toward a robust, technology-integrated framework for inclusive finance.
