New Delhi: The Finance Ministry is set to convene a high-level meeting with heads of public sector banks (PSBs) and chairpersons of Regional Rural Banks (RRBs) on January 30, 2026, to review their financial performance following the latest round of amalgamation.
Key Officials to Attend
The meeting will be chaired by M Nagaraju, Secretary, Department of Financial Services, and is expected to include NABARD Chairman, SIDBI CMD, and the concerned Executive Director of the Reserve Bank of India.
This session will be the first high-level review following the fourth round of RRB consolidation, effective May 1, 2025, which reduced the number of RRBs in India from 43 to 28.
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Focus on Financial Performance and Priority Sector Lending
The agenda will focus on evaluating the financial performance of RRBs post-amalgamation, including the progress of priority sector lending and the implementation of various government-backed financial schemes.
The consolidation process in May 2025 led to the creation of one state-owned RRB through the merger of 15 RRBs across 11 states, aimed at improving operational efficiency and cost rationalisation.
RRB Consolidation: A Brief Overview
The consolidation of RRBs has been implemented in multiple phases:
- Phase 1 (FY 2006–2010): RRBs reduced from 196 to 82
- Phase 2 (FY 2013–2015): Reduced further from 82 to 56
- Phase 3: Reduced from 56 to 43
- Phase 4 (May 2025): Reduced to 28
Improving Financial Health of RRBs
Recent data highlights significant improvements in the resilience of RRBs:
- Gross NPA ratio declined to 5.4% in March 2025, down from 10.8% in March 2019
- Provision Coverage Ratio (PCR) rose to 65.1%, up from 40% in March 2019
- Capital Adequacy strengthened with a Capital to Risk-Weighted Assets Ratio (CRAR) of 14.4% as of March 2025
These metrics indicate that RRBs are now better positioned to support rural credit needs while maintaining financial stability.
About Regional Rural Banks
RRBs were established under the RRB Act, 1976 to provide credit and other financial services to small farmers, agricultural labourers, and rural artisans. The Act was amended in 2015 to allow RRBs to raise capital from sources other than the Centre, state governments, and sponsor banks.
Currently, the Centre holds 50% of RRB stakes, while sponsor banks and state governments hold 35% and 15% respectively. Even after stake dilution, the combined shareholding of the Centre and sponsor banks cannot fall below 51%, ensuring continued government oversight.
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