(Representative image)
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Karnataka: Karnataka Vikas Grameena Bank and Karnataka Gramin Bank will be merged to form a single entity called Karnataka Grameena Bank, which will be headquartered in Ballari and sponsored by Canara Bank, as per a notification issued by the Finance Ministry on Tuesday.
The merger of the two regional rural banks (RRBs) in Karnataka is a part of ‘One State One RRB’ principle adopted by the Centre. The stated objective of the move is to achieve better operational efficiency and cost rationalisation.
As part of this exercise the Department of Financial Services (DFS) has notified amalgamation of 26 RRBs. “At present, 43 RRBs are functioning in 26 States and 2 UTs. Post amalgamation, there will be 28 RRBs in 26 states and 2 UTs with more than 22,000 branches covering 700 districts,” it said in a statement.
Headquartered in Dharwad, Karnataka Vikas Grameena Bank, at present, has network of 629 branches and a total business of Rs 30,748 crore consisting of Rs 17,647 crore deposits and advances of Rs 13,101 crore, as per information available on the company’s website.
Karnataka Gramin Bank is headquartered in Ballari. The bank has a network of 1,122 branches spread across 19 districts of Karnataka including Bengaluru, Mandya, Mysuru, Ballari and Chitradurga.
Karnataka Gramin Bank is the second largest regional rural bank in India with a business of Rs 63,697 crore as of March end 2024. The company’s deposits stood at Rs 34,462 crore, while advances at Rs 29,235 crore. It was formed in April 2019 through the amalgamation of Pragathi Krishna Gramin Bank and Kaveri Grameena Bank. While Pragathi Krishna Gramin Bank was sponsored by Canara Bank with head office at Ballari, Kaveri Grameena Bank was sponsored by State Bank of India with head office at Mysuru.
Currently both the RRBs in the state Karnataka Vikas Grameena Bank and Karnataka Gramin Bank are sponsored by Canara Bank and it will also continue to sponsor the merged entity.
Regional Rural banks (RRBs) have been established under provisions of RRBs Act 1976, enacted by the Parliament. The Centre owns 50% stake in RRBs. Out of the remaining 50%, 35% is owned by the sponsor bank, while the concerned state government controls 15% stake.
As per the gazette notification dated April 5, the effective date for amalgamation will be May 1, 2025.
“From the effective date of amalgamation, the transferor Regional Rural Banks that is Karnataka Vikas Grameena Bank and Karnataka Gramin Bank in the State of Karnataka shall cease to carry on the business including that of making any payment to any depositors or discharge any liability or obligation to the creditors except to the extent as may be necessary for implementation of the provisions of the amalgamation of this notification,” the Department of Financial Services said in the gazette notification.