The Indian Government is planning to merge 13 more regional rural banks (RRBs) as part of its consolidation strategy to make them viable.
After this merger, the total number of RRBs will drop to 82 from the present 95. The criteria for merging RRBs would be based on geographical proximity and contiguity. In September 2005, the government merged 101 such banks, bringing down the total number of RRBs to 95 from 196. The government expects the mergers to staunch bleeding by these banks. By March end, 39 loss-making RRBs were in the red by as much as INR 2,814 crore after they failed to recover farm loans. Total lending by RRBs are around INR 50,000 crore. In addition, these banks were hit by a wage hike.