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Regional rural banks merger likely to happen in current financial year

September 22, 2023

Regional rural banks merger likely to happen in current financial year
The merger of regional rural banks (RRBs) is unlikely to happen in the current financial year (2023-24), despite exemption from the Competition Commission of India (CCI), with the focus shifting to reforming the RRBs.

“Most of the RRBs are well-capitalised after receiving a recapitalisation of Rs 10,890 crore in 2022-23, and at present, the focus is on operational and governance reforms,” a senior finance ministry official told Business Standard.
 
The official added that merger discussions have also been affected due to the upcoming elections.
 
“CCI exemption is an enabling mechanism, but the decision will depend upon the performance of RRBs going forward,” he added.
 
The exemption dispensation from prior scrutiny and approval of CCI would be available for five years, the Ministry of Corporate Affairs (MCA) said in an executive order in July this year. A similar relief was granted by the MCA in 2017 for five years.
 
The majority of the RRBs, after the fund’s infusion, have a capital adequacy ratio (CAR) above 13 per cent, which shows the strengthening of their balance sheet.
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