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The Regional Rural Banks were formed under the RRB Act, 1976, with an objective to provide credit and other facilities to small farmers, agricultural labourers and artisans in rural areas. Currently, the Centre holds 50 per cent in RRBs, while 35 per cent and 15 per cent are with the concerned sponsor banks and state governments, respectively. In order to improve the financial health of RRBs, the government initiated consolidation of RRBs in a phased manner in 2005. The number of RRBs came down to 133 in 2006 from 196 at the end of March 2005. It further came down to 105 and subsequently to 82 at the end of March 2012. Further consolidation brought down number of such banks to 56. 

Now the government has continued consolidation of regional rural banks along with the public sector lenders and intends to bring down their number to 36 from the existing 56. In this regard, the Centre has begun consultations with states as they are one of the sponsors of the regional rural banks (RRBs) in the country.The proposed consolidation of RRBs and bringing down their tally from the existing 56 to 36 will usher in better scale-efficiency, higher productivity, robust financial health of such banks, improved financial inclusion and greater credit flow to rural areas. Besides, the move will enable RRBs to minimise their overhead expenses, optimise the use of technology, enhance the capital base and area of operation.

On the recommendation of Govt of Karnataka On 6th Feb 2019, Min of Finance has suggested to form 2 RRBs in the state. This is against the Central Govt's roadmap of 1 state 1 RRB thus will not serve the whole purpose.The staff of all the 3 RRBs of the state are deeply disappointed to see the Govt's stand on the issue. 

We request the Min of Finance, Dept of Financial services to redirect Govt of Karnataka, to reconsider their recommendation to retain 2 RRBs.