Page 29 - Banking Finance July 2025

ARTICLE

'One State, One RRB'

- A Policy for

Enhancement of

Rural Financial Dr. Jaydeb Bera

Associate Professor and Head,
Inclusion Pingla Thana Mahavidyalaya
Department of Commerce,

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.

Introduction: (NABARD). Before amalgamation 43 RRBs were operating
in 26 states and 2 union territories, but from 1st May
The Regional Rural Banks (RRBs) in India have a possibility
to develop various sectors of economy. RRBs were estab- 2025, 28 RRBs are functioning in 26 states and 2 union
territories.
lished in 1975, following the recommendations of the
Narasimham Committee on Rural Credit (1975) and formal-
ized under the RRB Act, 1976. Their aim is to strengthen Key aspects of the "One State, One RRB"
the rural economy by providing credit and other banking policy:
services to small and marginal farmers, agricultural labourers (i) Consolidation: Multiple RRBs within a state are
and artisans in rural and semi-urban areas. merged into a single RRB.

The first RRB in India was Prathama Bank, headquartered (ii) Effective date: The policy took effect on May 1, 2025.
in Moradabad, Uttar Pradesh. It was established on Octo- (iii) States affected: The policy applies to 10 states and one
ber 2, 1975. The 'One State, One RRB' or 'OS-OR' policy is a union territory where multiple RRBs existed.
reform implemented by the Government of India aims to (iv) Implementation: Due to implementation of this policy
consolidate Regional Rural Banks (RRBs) within each state the number of RRBs reduced from 43 to 28.
into a single entity, effective from May1, 2025. This policy
is intended to improve efficiency, reduce costs and enhance Objectives:
rural financial inclusion.
(i) Improved efficiency: It aims to boost rural banking ef-
Regulation: ficiency. It is expected to lead to better operational ef-
ficiency and cost reduction due to amalgamation.
The RRBs are regulated by the Reserve Bank of India under
the Banking Regulation Act, 1949 and supervised by Na- (ii) Enhanced financial inclusion: The merged RRBs will
tional Bank for Agriculture and Rural Development focus on providing loans, advances credits and financial

26 | 2025 | JULY | BANKING FINANCE