An attempt has been made in this paper to study the performance of RRBs from 1980 to 2011. In order to know the results of amalgamation of RRBs in September 2005, the study focuses financial results before or after amalgamation. Though growth in credit when seen in isolation gave the impression that RRBs have made a good progress, but in totality, they account for a very small portion (around 3 per cent) of the total assets of Indian banking sector, despite their significant branch network. The Government of India issued a notification on September 12, 2005 for amalgamation of 28 RRBs into nine new RRBs, sponsored by nine banks in six States. These amalgamations have become effective from September 12, 2005. Before amalgamation, deposits and advances of RRBs have grown 18 times and 13 times over the past ten years, that is, from 1980 to 1990. Between 1990 and 2004, deposits and advances grew by 14 times and 7 times respectively, but up to 1997, no profit could be earned by RRBs. After amalgamation, RRBs transformation has resulted in more than 300 per cent increase in net profits and near about 250 per cent hike in total business, and gradual decrease in number of loss-making banks, that is, from 22 in 2005–06 to only 3 in 2010–11.The Central Government initiated the process of amalgamating RRBs in September 2005. At that time there were 196 RRBs. The study reveals that RRBs has attempted well in reducing the NPA. In 2005–06, the net NPA stood at 3.96 per cent which declined to 2.05 per cent in 2010–11. RRBs are also disbursing loans to non-agricultural sector in rural areas. They are broad basing their credit pattern. The reduction in number of RRBs has not resulted reduction in staff strength as there was no termination of services of employees after consolidation.
