Regional Rural Banks in India: Can They Turn Around Post-Restructuring?

Regional rural banks(RRBs) in India hold great promise for financial inclusion given their rural penetration. However, financial viability of the RRBs has been a matter of concern since the early days of their inception. Restructuring of RRBs were taken up through a process of amalgamation of existing RRBs in late 2005 to improve their financial health. Following merger, there have been improvement in the financial performance of RRBs and the number of loss making RRBs has come down significantly. However, the RRBs as a system is still making losses as the accumulated losses far outweigh the profits. In this back drop, this book analyses whether the factors governing the performance of RRBs in the pre-merger scenario has changed in the post-merger period. The book explores the feasibility and merit of vertical merger of RRBs as opposed to the horizontal merger of RRBs pursued in the present restructuring exercise. The book also discusses the future course of action for the RRBs so that they can play a more meaningful role in the banking space of India

Biswa Swarup Misra is an Associate Professor in Economics at the Xavier Institute of Management, Bhubaneswar. He has been a researcher in the the Reserve Bank of India and an Economist in the Union Bank of India, a major commercial bank in India. Prof. Misra is the author of Regional Growth Dynamics in India published by Palgrave Macmillan, UK.