The government identified 3-4 regional rural banks for primary public offerings; probably this year

The government plans to include three to four financially strong regional banks in rural stock markets in the current fiscal post-consolidation process. Banking consolidation continues, with the aim of bringing RRBs up to 38 from the current 45, they said, adding that there would be several consolidations while state governments gave the green light.

Making RBPs united within a country is to enable KRB to minimize their costs, optimize the use of technology, increase the capital base and area of ​​exploitation, and increase exposure, sources say.

In the last few months, 21 different banks have been united in different countries to create a large organization to benefit from economies of scale.

In addition, they said that three to four RRBs are eligible to launch an IPO and they can hit the capital market this year.

These banks are formed under the 1976 RBR Act to provide credit and other services to small farmers, agricultural workers and craftsmen in rural areas.

The law was amended in 2015, allowing these banks to raise capital from sources other than the Center, states and sponsor banks. Currently, the Center owns 50% of the PA's value, while 35% and 15% are with the respective sponsor banks and state governments respectively.

Even after the shares are disposed of, the shareholding of the Center and the sponsoring public sector banks together can not fall below 51% according to the amended Law.

As a result, ownership and control will remain with the government. In order to improve the financial position of RRB, in 2005 the government started a consolidation of RRBs at a staged level. The number of RRBs dropped to 133 in 2006 from 196 at the end of March 2005. 82 at the end of March 2012 and subsequently at 56.

Budget 2019-20 provided Rs 235 crore for recapitalization of RRB.

Recapitalization support is provided to RRB in order to increase its capital so as to comply with regulatory capital requirements.

Under the current RBM recapitalization scheme, RAC support from the Center, relevant government governments, and sponsor banks in a ratio of 50:15:35, respectively, in order to be able to meet the regulatory capital requirements for the risk weighted assets ratio ( CRAR) of 9%.