'One State, One RRB' - A Policy for Enhancement of Rural Financial Inclusion

The 'One State, One RRB' or 'OS-OR' policy is a reform implemented by the Government of India aims to consolidate Regional Rural Banks (RRBs) within each state into a single entity, effective from May1, 2025. This policy is intended to improve efficiency, reduce costs and enhance rural financial inclusion.

- Dr. Jaydeb Bera

Introduction:

The Regional Rural Banks (RRBs) in India have a possibility to develop various sectors of economy. RRBs were established in 1975, following the recommendations of the Narasimham Committee on Rural Credit (1975) and formalized under the RRB Act, 1976. Their aim is to strengthen the rural economy by providing credit and other banking services to small and marginal farmers, agricultural labourers and artisans in rural and semi-urban areas.

The first RRB in India was Prathama Bank, headquartered in Moradabad, Uttar Pradesh. It was established on October 2, 1975. The 'One State, One RRB' or 'OS-OR' policy is a reform implemented by the Government of India aims to consolidate Regional Rural Banks (RRBs) within each state into a single entity, effective from May1, 2025. This policy is intended to improve efficiency, reduce costs and enhance rural financial inclusion.

Regulation:

The RRBs are regulated by the Reserve Bank of India under the Banking Regulation Act, 1949 and supervised by National Bank for Agriculture and Rural Development (NABARD). Before amalgamation 43 RRBs were operating in 26 states and 2 union territories, but from 1st May 2025, 28 RRBs are functioning in 26 states and 2 union territories.

Key aspects of the "One State, One RRB" policy:

(i) Consolidation: Multiple RRBs within a state are merged into a single RRB.

(ii) Effective date: The policy took effect on May 1, 2025.

(iii) States affected: The policy applies to 10 states and one union territory where multiple RRBs existed.

(iv) Implementation: Due to implementation of this policy the number of RRBs reduced from 43 to 28.

Objectives:

(i)