11th Government Mulls Merger of Regional Rural Banks with Indian Post - 11th BPS News

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Tuesday, 28 July 2020

Government Mulls Merger of Regional Rural Banks with Indian Post

Post merger of Public Sector Bank, Government is planning to merge all the regional rural banks (RRBs) with loss making Indian Post. It is also said that At one point, government was thinking to keep only two banks i.e. State Bank of India and the proposed India Post Bank. They will remain in the public sector as two large banks and also be vehicles for assorted government transfers to people.

Loss-making India Post, having a size and workforce hugely disproportionate to its shrinking role, may reinvent itself by becoming a full-fledged bank. According to a plan being discussed in the government, the 14,000 strong branch network of 45 regional rural banks (RRBs) will be brought under the fold of India Post, which itself runs 1.56 lakh post offices in the country. 

The Centre will wield control over the proposed bank via a holding company, of which the RRBs, where the Centre already holds 50%, will become subsidiaries. The existing India Post Payments Bank (IPPB)will also be made a subsidiary of the holding company. The other shareholders in the RRBs, namely public sector banks (35%) and the state governments (15%), will have the option to retain the stakes or monetise the same by selling these to the Centre.

Currently, IPPB, as a payments bank, can’t accept deposits above Rs 1 lakh per customer; also, it can’t lend.

Explaining the rationale behind the proposal, official sources said RRBs will bring in a readymade deposit and lending portfolio for the proposed India Post Bank to build on. Once the RRBs are brought under a common management, their efficiency will improve and common practices will be implemented across the networks, they added.

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