Govt Merges 26 Regional Rural Banks; One State, One RRB

One state, one RRB

The Government of India, through the Department of Financial Services (DFS), Ministry of Finance, has notified the merger of 26 Regional Rural Banks (RRBs) under the fourth phase of RRB consolidation. The move follows the “one state, one RRB” principle and aims to enhance operational efficiency, cost-effectiveness and resource optimisation in rural banking services.

The merger affects banks in 10 states and one union territory. After the merger, the total number of RRBs has come down from 43 to 28. These banks have over 22,000 branches across the country, mostly in rural and semi-urban areas.

RRB Merger 2025

What is the Reason behind the Banks Merger?

A major goal is to achieve cost rationalization by cutting down on duplicate infrastructure and management expenses. With fewer, but larger and stronger RRBs, the government expects better use of technology, staff, and financial resources, leading to more effective service delivery.

The consolidation is also seen as a way to strengthen the financial health of these banks, as merging weaker RRBs with stronger ones can create more stable and resilient institutions. Additionally, the merger is expected to enhance customer service, especially in rural and semi-urban areas where over 92% of RRB branches are located, thus reinforcing the broader goal of rural financial inclusion.

This step builds on the positive outcomes of earlier rounds of RRB consolidation, which have shown measurable improvements in performance and operational capacity.

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RRB merger History

This marks the fourth phase of Regional Rural Bank (RRB) amalgamations initiated by the Government of India to strengthen rural banking. In the first phase (FY 2006 to FY 2010), the number of RRBs was significantly reduced from 196 to 82. The second phase (FY 2013 to FY 2015) brought the count down further to 56, followed by the third phase (FY 2019 to FY 2021), which reduced the number to 43.

With the current fourth phase, the total number of RRBs has now been brought down to 28, reflecting the government’s continued efforts to streamline and modernize the rural banking sector for greater efficiency and financial inclusion.