In order to assess the post-amalgamation performance of the Public Sector Banks (PSBs) and Regional Rural Banks (RRBs), the Union Finance Ministry is going to hold a meeting with their heads on January 30.
This is going to be the first high-level meeting after the fourth round of consolidation of RRBs, which reduced their number from 43 to 28.
According to sources, the proposed meeting will be chaired by M Nagaraju, the Secretary of the Department of Financial Services. The meeting is likely to be attended by the NABARD Chairman, the SIDBI CMD, and the Executive Director concerned of the Reserve Bank of India (RBI).
The agenda of the meeting is to review the financial performance of RRBs after their merger. The review will focus on the progress of priority sector lending and various financial schemes undertaken by RRBs.
It should be recalled that one state-owned RRB became a reality on May 1 following the consolidation of 15 RRBs across 11 states. The consolidation had been effected with a view to achieve better operational efficiency and cost rationalisation.
The number of RRBs was reduced from 196 to 82 in the first phase that took place between FY 2006 and FY 2010. It was further brought down to 56 in the second phase (FY 2013 – FY 2015), and in phase 3, it was further reduced to 43.
As per the available data, the gross NPA ratio of RRBs declined to 5.4 percent in March 2025 from a peak of 10.8 percent in March 2019.
At the same time, resilience increased, with the provision coverage ratio (PCR) of RRBs rising to 65.1 percent from 40 percent in March 2019.
Similarly, RRBs’ capital adequacy improved with a Capital to Risk-Weighted Assets Ratio (CRAR) of 14.4 percent as of March 2025.
These banks had been established under the RRB Act, 1976, with the objective of providing credit and other facilities to small farmers, agricultural labourers and artisans in rural areas.
In order to permit these banks to raise capital from sources other than the Centre, states, and sponsor banks, the Act was amended in 2015, according to which the shareholding of the Centre and the sponsor public sector banks together cannot fall below 51 percent.
The Centre currently holds a 50 percent stake in RRBs, while 35 percent and 15 percent are with the concerned sponsor banks and state governments, respectively.
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