In a move aimed at ensuring operational efficiency and viability of the banking sector, two prominent bank unions – the All India Bank Officers’ Confederation (AIBOC) and the All India Bank Employees Association (AIBEA) – have called for the merger of Regional Rural Banks (RRBs) with their respective Sponsor Banks.
In a letter addressed to Finance Minister Nirmala Sitharaman, the unions emphasized the need to end the duality of control over RRBs and bring them under the same operational and regulatory framework as the sponsored banks. According to the unions, this can be effectively achieved by merging these entities.
“The merger of RRBs with their sponsor banks will be a seamless technological transition,” the letter stated, highlighting the ongoing efforts to upgrade the technological platforms of all 43 RRBs to align with the standards of their sponsor banks.
The unions further argued that the integration would also enhance the skill sets of RRB employees, addressing the issues of staff shortages in both the RRBs and the sponsored banks. “Such integration in HR will also be seamless as the salary structures and other perquisites enjoyed by the officers and employees of RRBs are broadly the same, and they are also exposed to the work culture of their respective sponsor banks,” the letter suggested.
Emphasizing the benefits of the proposed merger, the unions stated that it would facilitate enhanced supervision, governance, and accountability, thereby ensuring greater sustainability in the banking sector. “The multifarious advantages that follow from the merger of the RRBs with their sponsor banks make us unequivocal in placing our demand for a complete merger of all the 43 RRBs,” the letter said.
Furthermore, the unions highlighted that the merger would help mobilize CASA (Current Account Savings Account) deposits and establish a more efficient credit delivery system to benefit the rural population.
There are 43 RRBs sponsored by 12 scheduled commercial banks, with around 22,000 branches covering 702 districts across the country. Approximately 92% of the RRB branches are located in rural and semi-urban areas, catering to the financial needs of the rural populace.
The central government holds a 50% stake in RRBs, while the sponsor banks and state governments own 35% and 15%, respectively.
