Employee associations demand merger of RRBs with respective sponsor banks

Bank employee associations have demanded before Union Finance Minister Nirmala Sitharaman to merge Regional Rural Banks (RRBs) with their respective sponsor banks to ensure overall efficiency and viability of the banking sector.

“Competition among Public Sector Banks and RRBs is leading to the wastage of scarce financial resources by offering the same types of services. Despite this, a large chunk of our rural population is being denied the benefits of technology-driven, up-to-date banking products. Merger of RRBs with sponsor banks will ensure delivery of a uniform product range to the entire clientele, accelerating the growth of the rural economy and prioritising sector lending, which is crucial for the government's plan for robust Indian economic growth,” said a joint statement addressed to Sitharaman by the All India Bank Officers’ Confederation and the All India Bank Employees Association, representing more than 6 lakh bank employees.

RRBs were set up regionally and oriented towards rural areas, with capital contributed by the Government of India, state governments, and sponsored banks under the RRB Act, 1976. There are now 43 RRBs sponsored by 12 scheduled commercial banks with around 22,000 branches, operating approximately 30 crore deposit accounts and 3 crore loan accounts across 702 districts. All Public Sector Banks except Punjab & Sind Bank sponsor one or more RRBs. J & K Bank is the only private sector bank sponsoring an RRB. Ninety-two per cent of RRB branches are located in rural and semi-urban areas.

The joint statement further added that merging RRBs with their sponsor banks will update the skills of RRB employees to modern banking practices and effectively address staff shortages in both RRBs and the sponsor 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, which has provided operational support over the last 45 years,” it added.

“The proactive step of merging RRBs with their respective sponsor banks will facilitate enhanced supervision, governance, and accountability, ensuring greater sustainability of the entire banking sector,” the joint statement said.