Secretary DFS Reviews RRB Performance and Amalgamation Progress: 5-Year Vision Roadmap

The reach of RRBs has also expanded significantly, with over 22,000 branches now operational across 700 districts, out of which 92% are located in rural or semi-urban areas.

In a significant meeting held in Mumbai, Shri M. Nagaraju, Secretary of the Department of Financial Services (DFS), Ministry of Finance, led a high-level review of the performance and ongoing amalgamation process of Regional Rural Banks (RRBs). The meeting was attended by top stakeholders in India’s rural financial ecosystem, including the Chairman of NABARD, senior officials from DFS, representatives of Sponsor Banks, SIDBI, the Reserve Bank of India (RBI), and Chairpersons of all RRBs.

This session was a part of the government’s broader strategy to strengthen the rural banking architecture and ensure greater alignment with national financial inclusion goals.

Focus on “One State-One RRB” Reform

A key agenda item was the implementation of the government’s ambitious “One State-One RRB” policy. Secretary Nagaraju emphasized the urgent need for RRBs to align with this framework to streamline operations, enhance scalability, and improve outreach. He reiterated that the amalgamation of multiple RRBs within a state into a single entity is critical for efficient governance and financial sustainability.

He highlighted that Sponsor Banks must play a pivotal role in this integration process. They are expected to not only guide RRBs through the amalgamation but also ensure they receive technological and strategic support throughout the transition. The deadline for full integration has been firmly set as 30th September 2025.

Encouraging Performance with Key Metrics

The review highlighted several achievements of RRBs in recent years. As of FY 2024–25, RRBs have collectively posted a consolidated net profit of ₹7,148 crore, a remarkable turnaround reflecting increased operational efficiency and focused lending practices. Another milestone is the reduction in Gross Non-Performing Assets (GNPA), which now stand at 5.3%, the lowest level in the last decade.

The reach of RRBs has also expanded significantly, with over 22,000 branches now operational across 700 districts, out of which 92% are located in rural or semi-urban areas. These figures reaffirm the pivotal role RRBs play in bridging the credit gap in India’s hinterlands.

Strategic Lending in Priority Sectors

In line with the government's thrust on priority sector lending, Secretary Nagaraju urged RRBs to increase their focus on agriculture and allied sectors, Micro, Small and Medium Enterprises (MSMEs), and government-sponsored schemes such as PMEGP, MUDRA, and others. He stressed that rural banks must position themselves as key enablers of India’s rural and semi-urban economic growth.

Addressing HR and Technological Challenges

During the meeting, concerns regarding Human Resource (HR) management during amalgamation were also discussed. Secretary Nagaraju acknowledged that HR-related issues — including staff deployment, role rationalization, and career progression — must be addressed sensitively and in consultation with employee associations.

Technology upgradation was another area of emphasis. Sponsor Banks were advised to accelerate the digital transformation of RRBs, including core banking upgrades, cybersecurity resilience, and customer-centric innovations.

Vision for the Next Five Years

Looking ahead, the DFS Secretary instructed Sponsor Banks, in collaboration with RRBs, to prepare a comprehensive 5-year roadmap. This strategic plan should include targets for credit growth, technological adoption, financial inclusion metrics, customer service benchmarks, and long-term viability strategies.

The roadmap is expected to serve as a guiding document for RRBs to become more agile, resilient, and competitive in the fast-evolving Indian banking sector.

A Call to Action for Sustainable Growth

Secretary Nagaraju concluded by emphasizing that the amalgamation exercise is not merely a structural reform but a foundational step toward building robust, digitally-enabled, and sustainable rural banking institutions. With consistent support from Sponsor Banks and oversight from DFS, RRBs are poised to evolve into vital engines of inclusive growth and rural prosperity.