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Some RRBs may be allowed to list on stock exchanges

News reports suggested that the government is proposing to list at least 3 regional rural banks (RRBs) on the stock exchanges in the current financial year. However, this will be done after the consolidation exercise that is being planned of these banks. The government wants to reduce the number of RRBs to 38 from the current 45 through a consolidation program. Some 21 RRBs have already been amalgamated in various states in the last few months with a view to reduce overhead expenses, optimize the use of technology and enhance the capital base. RRBs were formed under the RRB Act, 1976 with an objective to provide credit and other facilities to small farmers, agricultural laborer and artisans in rural areas. The Act was amended in 2015 to enable them to raise capital from sources other than the state and central governments and the sponsor banks. The Centre holds 50% stake in RRBs, while 35% is held by the concerned sponsor banks and 15% by the state governments.

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