Consolidation in Indian banking sector: An empirical study on regional rural banks (RRBS)

Since 1975 RRBs are being regarded as one of most important sources of institutional financing of rural credit in India. But at the end of expansion phase (1987) financial viability of the RRBs were challenged by their huge accumulated losses. It was pointed out that the RRBs to survive as a credit institution could not remain unviable for long time. In response to the socio economic need, there should be continuous urge to reconcile efficiency and social equity consideration and combine social banking with efficient banking. Various steps has been taken up by GOI for strengthening the RRBs e.g. cleansing of balance sheets, re- capitalisation etc. State-wise & Sponsor bank wise consolidation of RRBs is the recent route of restructuring in RRBs for improving their operation efficiency. Present study makes an empirical view over the region-wise consolidation of RRBs in India in the context of consolidation in Indian rural banking sector for the very purpose of necessity of institutional rural credit to the poor rural folk.