The Regional Rural Banks (RRBs) were established to cater the rural clientele. Over the years, RRBs have been facing problems due to directed credit and various other controls. Steps have been taken up by the Government Of India to improve their viability. But, the trend of recurring losses continued. In view of this, a policy outcome for amalgamation of RRBs at sponsor bank level was initiated by Government Of India in the year 2005–06. Deccan Grameena Bank (DGB) is one of the bank which was formed after amalgamation of four RRBs sponsored by State Bank of Hyderabad in Andhra Pradesh State. The study is about the achievement of the objectives of amalgamation by the Deccan Grameena Bank. Besides enjoying economies of scale, achieving operational efficiency in administration was the main objective. The bank could succeed in these aspects and could improve its profitability position. In three years of amalgamation, the business of the bank increased by 89.62 per cent, the percentage of Non-Performing Assets to total advances was decreased to 1.77 per cent, the operating cost reduced to 1.26 per cent and the net margin increased to 1.90 percent.
Regional Rural Banks, Amalgamation, Economies of Scale, Operational Efficiency, Profitability
