Centre Exempts Regional Rural Banks from CCI's Merger Control Regime

• 25 Jul 2023

In a move perceived as a prelude to the next round of consolidation among regional rural banks (RRBs), the Centre has exempted RRBs from the purview of Competition Commission of India's (CCI) merger control regime.

This exemption allows RRBs to proceed with mergers without prior scrutiny and approval from CCI for a period of five years, paving the way for smooth consolidation within the sector.

Key Points:

• Tenure of exemption: The exemption will be available for five years.
• Facilitating RRB Mergers: This move enables RRBs to merge without prior scrutiny and approval from CCI, which examines whether mergers will affect competition or consumer interests.
• Status of RRBs: Currently, there are around 43 RRBs in India, regulated by the Reserve Bank of India (RBI).
• Finance Minister's Review Meetings: Union Finance Minister is set to hold review meetings across the country on the functioning of RRBs along with their sponsor banks.
• History of RRBs: India's RRB journey began in 1975, conceptualized as hybrid micro-banking institutions to serve the credit needs of small and marginal farmers, agricultural laborers, and the socio-economically weaker sections of the population.
• Stake in RRBs: The Centre holds a 50% stake in each RRB, sponsor banks hold 35%, and the remaining 15% is with the State government.