High-Stakes Review: The Future of RRBs Post-Consolidation

The finance ministry will meet with banking leaders to evaluate the performance of Regional Rural Banks (RRBs) following their recent amalgamation. The session, led by M Nagaraju, will assess progress in priority sector lending and financial schemes, marking the initial high-level discussion post the latest consolidation phase.

The Finance Ministry is set to conduct a critical meeting with the heads of public sector banks, including Regional Rural Banks (RRBs), to scrutinize their performance post-amalgamation. The meeting, scheduled for January 30, will be chaired by the Secretary of the Department of Financial Services, M Nagaraju. It is anticipated to see attendance from the Chairman of NABARD, CMD of SIDBI, and an executive director of the Reserve Bank of India.

This high-level meeting marks the first of its kind following the fourth wave of consolidation, effective from May 1, that saw the reduction of RRBs from 43 to 28. The discussions will focus on evaluating the financial outcomes of the RRBs since the merger, alongside gauging the impact on priority sector lending and other financial schemes managed by RRBs.

Originally established under the RRB Act, 1976, these banks aim to provide essential financial services to rural communities, including small farmers and artisans. The amalgamation plan, which has progressively reduced the number of RRBs in phases, is credited with improving fiscal indicators, such as a decline in gross NPA ratio and higher capital adequacy.

(With inputs from agencies.)