Performance of RRBs in pre-Merger and post-Merger period

Abstract

Regional Rural Banks are established under the provisions of an ordinance promulgated on 26^th September, 1975 and the RRB Act, 1976 with an objective to ensure sufficient institutional credit for agriculture and other rural sectors. Reforms and mergers introduced by the Government of India in consultation with Reserve Bank of India (RBI) and National Bank of Agriculture and Rural Development (NABARD) in the year 1994-95 to 2005-06. So, there is a need to study the growth and financial performance of Regional Rural banks in India in pre-Merger & post-Merger period. The study is based on secondary data collected from annual reports of NABARD and RBI. In order to provide access to low-cost banking facilities to the poor rural banking in India was started. Rural banks in those days mainly focused upon the Argo sector. RRBs in India penetrated every corner of the country and extended a helping hand in the growth process of the country. This research aim is that to analyze the financial performance of RRBs before amalgamations and after amalgamations. As spread ratio comprises of Interest income earned and interest income expensed divided by total assets. The other financial indicators such as no. of RRBs, branches, district coverage, deposits and advances have shown growth but it is not significant growth. The Internal working group of the Reserve Bank of India (RBI) suggested that merger and amalgamation of Regional Rural Banks (RRBs) may help in improving their health and viability, even as it sought to bring in new banks both public and private as sponsors of the merged RRBs.