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A review meeting on Regional Rural Bank performance, chaired by the Secretary, Department of Financial Services, recorded an all-time high consolidated net profit of Rs 10,176 crore for RRBs in FY 2025-26, up from Rs 6,820 crore in FY 2024-25.
The total business of all 28 RRBs crossed Rs 13.5 lakh crore, surpassing the business level of a few individual Public Sector Banks; 28 RRBs now operate 22,273 branches across 26 States and 3 Union Territories, covering about 700 districts.
Gross and Net Non-Performing Assets fell to all-time lows of 5.3 per cent and 2.1 per cent respectively, while the Credit-Deposit Ratio reached an all-time high of 75.2 per cent.
RRBs opened over 54.98 lakh new Pradhan Mantri Jan Dhan Yojana accounts during FY 2025-26 and met all targets and sub-targets prescribed under Priority Sector Lending.
The meeting was attended by the Chairman of NABARD, the Chairpersons of all 28 RRBs, officials of the Department of Financial Services, Sponsor Banks, the Reserve Bank of India and SIDBI; sponsor banks were urged to strengthen their RRBs' IT infrastructure.
The administrative department for public sector banks, RRBs, insurance and pension; it chairs the RRB performance reviews and drove the 'One State, One RRB' amalgamation.
The apex development bank for agriculture and rural development; it supervises RRBs and cooperative banks and refinances rural credit. Its Chairman attended the review meeting.
Regulator of RRBs, which are scheduled commercial banks for regulatory purposes; NABARD carries out their supervision.
The principal financial institution for the promotion, financing and development of the MSME sector; represented at the review because RRB lending intersects with rural enterprise credit.
The commercial banks that hold 35 per cent of an RRB's capital and are expected to 'handhold' it — the Secretary specifically urged them to strengthen their RRBs' IT infrastructure.
The statute constituting RRBs. It fixes the tripartite shareholding of 50 per cent Central Government, 35 per cent Sponsor Bank and 15 per cent State Government — the feature that makes an RRB simultaneously a central, state and commercial bank creature, and the reason amalgamations require action by the Central Government rather than a board decision.
The fourth phase of consolidation since 2006. It merged 26 RRBs, reducing the national total from 43 to 28, on the reasoning that larger single-state entities have better scale, technology and cost efficiency than many small district-level banks.
RRBs must meet targets and sub-targets for lending to agriculture, small and marginal farmers, micro-enterprises and weaker sections. The release notes that all targets and sub-targets were achieved — the metric by which an RRB's developmental mandate, as distinct from its profitability, is judged.
The Credit-Deposit Ratio is the proportion of a bank's deposits that it has lent out. A CD ratio of 75.2 per cent means that for every Rs 100 collected as deposits, Rs 75.2 has been advanced as credit. For rural banking the ratio carries a particular meaning: a persistently low CD ratio indicates that savings raised in rural areas are being deployed elsewhere rather than financing local economic activity, which has long been a criticism of rural branch networks. A rise to an all-time high therefore reads as more of the deposits mobilised in RRB territory being lent within it. It has to be read alongside asset quality, because a CD ratio can also be pushed up by lending imprudently — which is why the simultaneous fall of Gross NPA to 5.3 per cent and Net NPA to 2.1 per cent matters to the interpretation.
Simple Analogy: Think of a village well. The CD ratio measures how much of the water drawn from it is used in the village rather than carted away. Rising use is good news only if the well is not being drained faster than it recharges — which is what the NPA figures tell you.
| Indicator | FY 2024-25 | FY 2025-26 |
|---|---|---|
| Consolidated net profit | Rs 6,820 crore | Rs 10,176 crore (all-time high) |
| Gross NPA | Not stated in the release | 5.3 per cent (all-time low) |
| Net NPA | Not stated in the release | 2.1 per cent (all-time low) |
| Credit-Deposit Ratio | Not stated in the release | 75.2 per cent (all-time high) |
| Number of RRBs | 43 until 30 April 2025 | 28 after the 'One State, One RRB' amalgamation of 1 May 2025 |
The 54.98 lakh new Jan Dhan accounts opened by RRBs in one year show where the last mile of account opening actually sits. PMJDY was launched on 28 August 2014 as the National Mission for Financial Inclusion, and rural branch networks are the channel through which its rural coverage is delivered.
'One State, One RRB' is the rural counterpart of the public sector bank mergers. The same reasoning applies in both — scale, technology investment and cost efficiency — and the same counter-argument applies too, that consolidation can distance a bank from local conditions.
RRBs are among the few institutions for which PSL is not a constraint imposed on ordinary business but the business itself. That is why the release reports PSL compliance alongside profit — the developmental mandate and the commercial result are meant to be read together.
The Secretary's direction to sponsor banks to strengthen RRB IT infrastructure identifies the binding constraint. An RRB's competitive disadvantage against a commercial bank in a rural district is increasingly technological rather than geographic.
General Awareness > Banking Structure, RRBs and Financial Inclusion
GS Paper 3 > Indian Economy > Banking and Inclusive Growth
General Awareness > Economy and Banking
General Awareness > Current Affairs
'Pradhan Mantri Jan-Dhan Yojana' has been launched for
Answer: promoting financial inclusion in the country
What is/are the facility/facilities the beneficiaries can get from the services of Business Correspondent (Bank Saathi) in branchless areas? 1. It enables the beneficiaries to draw their subsidies and social security benefits in their villages. 2. It enables the beneficiaries in the rural areas to make deposits and withdrawals. Select the correct answer using the code given below.
Answer: Both 1 and 2
The establishment of 'Payment Banks' is being allowed in India to promote financial inclusion. Which of the following statements is/are correct in this context? 1. Mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of Payment Banks. 2. Payment Banks can issue both credit cards and debit cards. 3. Payment Banks cannot undertake lending activities. Select the correct answer using the code given below.
Answer: 1 and 3 only
Pradhan Mantri MUDRA Yojana is aimed at
Answer: bringing the small entrepreneurs into formal financial system
What is the purpose of setting up of Small Finance Banks (SFBs) in India? 1. To supply credit to small business units 2. To supply credit to small and marginal farmers 3. To encourage young entrepreneurs to set up business particularly in rural areas. Select the correct answer using the code given below:
Answer: 1 and 2 only
Very high — RRB structure, shareholding and consolidation are staple banking-exam content and appear regularly in UPSC Prelims economy questions.
A bank constituted under the Regional Rural Banks Act, 1976, jointly owned by the Central Government (50 per cent), a sponsor bank (35 per cent) and the State Government (15 per cent).
The fourth phase of RRB consolidation, effective 1 May 2025, which merged 26 RRBs and cut the national total from 43 to 28.
The share of deposits that a bank has advanced as credit; RRBs reached an all-time high of 75.2 per cent in FY 2025-26.
Mandated lending to agriculture, small enterprises, weaker sections and other specified sectors, with both overall targets and sub-targets.
The commercial bank holding 35 per cent of an RRB's capital and responsible for supporting it, including its IT infrastructure.