NEW DELHI: The recently amalgamated Regional Rural Banks (RRBS) across 11 states and Union territories have come into effect today.

"Amalgamation of 26 Regional Rural Banks (RRBs) in 11 States/UT takes effect from today, marking a significant step toward strong RRBs, better governance, improved credit flow and financial inclusion," Department of Financial Services said in a post on X.

On April 8, the Department of Financial Services (DFS) notified the amalgamation of 26 Regional Rural banks (RRBs) on the principles of 'One State One RRB'.

This was the fourth phase of the amalgamation of RRBs.

Considering the improvement in the efficiency of the RRBs due to amalgamations in the past, the Ministry of Finance rolled out an amalgamation plan in November 2024 for consultation with stakeholders.

After consultation with stakeholders, amalgamation of 26 RRBs in 10 States and 1 UT have been carried out with primary focus on improvement in scale efficiency and cost rationalization.

Post the latest amalgamation, there will be 28 RRBs in 26 states and 2 UTs with more than 22,000 branches covering 700 districts.

Their predominant area of operation is in rural areas with approximately 92 per cent of branches in rural or semi urban areas.

In the previous three phases Phase-I (FY 2006 to FY 2010) number of RRBs was reduced from 196 to 82, Phase-2 (FY 2013 - FY 2015) number of RRBs was reduced from 82 to 56 and Phase-3 (FY 2019 to FY 2021) the number of RRBs were reduced from 56 to 43.

According to the Department of Financial Services' website, the Regional Rural Banks (RRBs) were established in 1975 to develop the rural economy by providing, for the development of agriculture, trade, commerce, industry and other productive activities in the rural areas, credit and other facilities, particularly to small and marginal farmers, agricultural labourers, artisans and small entrepreneurs.