Govt Considering To Take 5 Regional Rural Banks Public By FY27, Says Report

This move follows a series of consolidations under the “One State, One RRB” initiative, which sought to streamline the operations of rural lenders and reduce overlap among public sector banks.

The government sees this push towards listing as an opportunity to enhance the credibility of RRBs in the eyes of investors and other stakeholders.

Source : ABPLIVE AI

In a significant step aimed at modernising India’s rural banking landscape, the government is preparing to take at least five Regional Rural Banks (RRBs) public by the end of the 2026–27 financial year, media reports said.

This move follows a series of consolidations under the “One State, One RRB” initiative, which sought to streamline the operations of rural lenders and reduce overlap among public sector banks, according to a Business Standard report published on Saturday.

As part of the latest reforms, the central government concluded another round of mergers on May 1, marking the fourth phase of its rural banking consolidation drive. With this, the number of RRBs in the country has come down to 28, from the earlier 43. These 28 banks now span 26 states and two Union Territories, maintaining a presence across more than 22,000 branches. Collectively, they serve around 700 districts, with the majority of their branch network, close to 92 per cent, located in rural and semi-urban areas.

Criteria Set for RRBs Eyeing Public Listing

To be considered eligible for listing, RRBs must meet a strict set of financial performance benchmarks. These include a minimum net worth of Rs 300 crore maintained over the past three financial years, and a capital adequacy ratio exceeding 9 per cent for the same period. Furthermore, in any three out of the last five years, the bank must have recorded a return on equity (RoE) of 10 per cent.

Another critical prerequisite is that the applying bank must not be operating under the Reserve Bank of India’s prompt corrective action framework. These conditions are intended to ensure that only financially robust and well-managed RRBs enter the public markets.

Strengthening Investor Confidence

The government sees this push towards listing as an opportunity to enhance the credibility of RRBs in the eyes of investors and other stakeholders. “Our objective is to bolster the image of RRBs as trustworthy and high-value institutions for both stakeholders and investors. If these banks continue to...,” a government official was quoted as saying.

The ongoing restructuring efforts are part of a broader strategy by the Department of Financial Services (DFS), functioning under the Ministry of Finance, to improve cost efficiency and strengthen the rural financial ecosystem. The fourth merger phase alone has impacted ten states and one Union Territory, creating larger, consolidated entities to better align with the "One State, One RRB" vision.

By reducing redundancies and enhancing the financial health of rural banks, the Centre aims to make these institutions more competitive and self-reliant, paving the way for public listings and attracting market capital for future growth.