New Delhi: A Parliamentary panel has suggested that the government consider launching IPOs of highly profitable Regional Rural Banks (RRBs) to attract market capital and strengthen corporate governance standards.
In its report, the Standing Committee on Finance, headed by senior BJP leader Bhartruhari Mahtab, noted that the structural consolidation of RRBs has been successfully completed, reducing their number from 43 to 28 viable entities across 11 states. This consolidation, the panel said, eliminates the need for further capital infusion in 2026–27.
RRBs posted a record consolidated net profit of Rs 7,720 crore in the first nine months of FY26, while GNPAs declined to a 13-year low of 5.4 per cent. However, the panel flagged vulnerabilities, particularly a 13.8 per cent GNPA in priority sector education loans.
It recommended that RRBs mitigate such risks by leveraging their inclusion in the Credit Guarantee Fund Scheme for Education Loans and deploying AI-driven automated early warning systems to detect stress in loan portfolios. The committee also urged the government to guide profitable RRBs toward IPOs to mobilise market capital and improve governance.
The latest consolidation, implemented from May 1, 2025, marked the fourth phase of reforms under the “One State–One RRB” principle, bringing the number of RRBs down to 28 across 26 states and two Union Territories. RRBs were established under the Regional Rural Banks Act, 1976 to provide credit and financial services to farmers, agricultural labourers and rural artisans.