The proposed merger of regional rural banks (RRBs) in Andhra Pradesh has hit a temporary road block due to the prevailing uncertainty over the creation of separate state of Telangana.
It was earlier proposed to merge Chaitanya Godavari Grammena Bank (CGGB) with Saptagiri Grameena Bank sponsored by Indian Bank.
Similarly, Deccan Grammena Bank, which is sponsored by State Bank of Hyderabad, is proposed to be merged with Andhra Pradesh Grameena Vikas Bank for which State Bank of India is the sponsor. RRBs are spread across several districts and regions of the State.
“The amalgamation process, which was actively initiated about three months ago, is now halted as some modifications and clarifications have been sought by the State Government in view of the much-talked about formation of Telangana State,” a senior official told
The Ministry of Finance, Government of India had also notified area of operations of the RRBs in the State after their amalgamation.
It was envisaged that geographically contiguous RRBs sponsored by different banks within a state could be amalgamated with a single sponsor bank. The first phase of amalgamation by the Ministry began in 2005 which reduced the total number of RRBs from 196 to 82.
However, as there are still many small banks, a second round of amalgamation began at the national level including Andhra Pradesh.
Subsequently, as per the recommendations of the State Government on areas of operations for RRBs after amalgamation was accepted and the process took off.
“But after obtaining all necessary approvals, the process has been kept pending. If Telangana state is created, all this will be a meaningless exercise as a RRB cannot operate in more than one State,” the official said.
In the last three months, the talk of creation of Telangana State has been in the air. Last week, the Government announced that discussions with all political parties were completed and a decision would be taken soon.
However, it remains to be seen how things would shape up for RRBs in the State.