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Madhya Pradesh

Merger of Banks in Madhya Pradesh

  • 03 May 2025
  • 3 min read

Why in News? 

The Central Government will implement the One State-One RRB policy from 1 May 2025, to improve the quality of rural banking services. 

Key Points 

  • About One State-One RRB Policy : 
    • Under this policy, the number of Regional Rural Banks (RRBs) will be reduced from 43 to 28, with one RRB serving all rural areas in each state. 
    • Each new RRB will have an authorised capital of Rs 2,000 crore and operate with improved efficiency, management, and customer service. 
  • Objective: 
    • To improve the effectiveness and organization of rural banking services . 
    • Providing integrated services and improved access to customers . 
    • Reduce operating costs and grow business . 
    • Accelerating financial inclusion . 
  • Historical background of Unification: 
    • In the first phase (2006-2010), the number of RRBs was reduced from 196 to 82. 
    • In the second phase (2013-2015), it was reduced from 82 to 56 and in the third phase, it was reduced from 56 to 43. 
    • Now there will be a total of 28 RRBs left in the fourth phase . 
  • Merger of banks in Madhya Pradesh:  
    • From 1 May 2025, Madhya Pradesh Gramin Bank and Madhyanchal Gramin Bank have merged into a single rural bank, sponsored by Bank of India with its headquarters in Indore.  
    • The move aims to strengthen rural banking and streamline operations. 

 Regional Rural Banks (RRBs) 

  • Regional Rural Banks (RRBs) were established in the year 1975 under the provisions of the Ordinance promulgated on September 26, 1975 and the Regional Rural Banks Act, 1976. 
  • RRBs are financial institutions which ensure adequate credit for agriculture and other rural sectors. 
  • RRBs enhance the co-operative features and the capacity of a commercial bank to mobilise business and financial resources while being familiar with rural problems. 
  • Regional Rural Banks are operated in collaboration with the Government of India, State Governments and sponsor banks.  
  • The shareholding of the Government of India, sponsor banks and the respective states in these banks is 50%, 35% and 15% respectively.  
  • Regional Rural Banks are regulated by the ‘National Bank for Agriculture and Rural Development ' (NABARD). 
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