One State One RRB: AIRRBEA Urges DFS to Ensure RRB Autonomy and Delink from Sponsor Banks

In the wake of the “One State One RRB” reform entering Phase IV of amalgamation, the All India Regional Rural Bank Employees Association (AIRRBEA) has written to the Department of Financial Services (DFS) calling for deeper structural reforms that ensure professionalism, autonomy, and end sponsor bank dominance over Regional Rural Banks (RRBs).

In a detailed letter dated April 11, 2025, the union welcomed the move to consolidate RRBs at the state level, but emphasized that without governance reforms and independent leadership, the amalgamation would fall short of its transformative potential.

Image: AIRRBEA letter to DFS detailing the structural reform in RRBs, autonomous functioning and role of sponsor banks. 

10 Key Suggestions to Uphold Autonomy and Efficiency

AIRRBEA put forward the following 10-point charter of suggestions aimed at strengthening RRB governance and decentralised efficiency:

1. Chairmen to Be Appointed from Open Market – Similar to PSBs, to encourage professionalism and merit-based selection.
   
    
2. Amend Section 11 of RRB Act – Transfer appointment authority of Chairmen from sponsor banks to the Central Government.
   
    
3. Re-categorize RRBs Post-Amalgamation – Adjust leadership ranks based on business volume; larger RRBs should be headed by ED or CGM-ranked officers.
   
    
4. Revise Cadre Norms for GMs – General Managers should be one level below the Chairman, with scaled roles for large banks.
   
    
5. Avoid Sponsor Bank Deputation – Instead, promote experienced RRB officers or use only short-term deputations in limited cases.
   
    
6. Encourage Cross-Deputation Among RRBs – For GMs, HoDs, and Regional Managers to build internal capacity and leadership.
   
    
7. Establish Common Technology Platform – Bring all RRBs under a single national software and clearing portal.
   
    
8. Promote RRB Branding – Launch joint publicity campaigns to improve public awareness of RRBs' role beyond government schemes.
   
    
9. Standardise Policy Implementation – Ensure all RRBs uniformly follow directives from GOI and NABARD without sponsor bank interpretations.
   
    
10. End Day-to-Day Sponsor Interference – Restore functional independence to Chairmen and General Managers.

Reorganisation: A Tiered Model Based on Size & Reach

AIRRBEA has proposed a three-tier classification system to align leadership roles with the scale of operations:

• Category A RRBs (largest in size/business): Should be headed by officers of Executive Director rank.
  
   
• Category B RRBs: Should be led by Chief General Manager-level officers.
  
   
• Category C RRBs: Can be headed by General Managers.
   

To further strengthen the professional structure of rural banking leadership, AIRRBEA has also suggested that RRBs be brought under the purview of the Financial Services Institutions Bureau (FSIB)—just like Public Sector Banks. This would ensure that selection and governance practices are aligned with broader financial sector standards, enhancing transparency, accountability, and institutional competence.

The union additionally recommends introducing Zonal Offices in Category A and B RRBs to improve operational efficiency in states where the merged entities now cover extensive geographies.

Professionalised Selection Committee for Chairman

To ensure transparency and merit in appointments, AIRRBEA backed the long-standing recommendation of the KC Chakravarthy Committee for a Selection Committee, comprising:

• One RBI officer (CGM rank or higher)
  
   
• One NABARD officer (DMD rank or higher)
  
   
• One ED/MD from the sponsor bank
  
   
• An external rural banking expert
   

This committee would empanel candidates from open market applicants across PSBs, RRBs, RBI, and NABARD—excluding the sponsor bank of the RRB in question.

Selection Procedure and Eligibility Criteria at a Glance

Procedure:

• Appointments only from the panel prepared by the selection committee.
  
   
• Tenure capped at 3 years, extendable only after re-evaluation.
  
   
• Government retains the right to terminate tenure prematurely.
  
   
• Annual cycle of selections (April–March) for all RRBs.
  
   
• Applications to be invited via national advertisement.
  
   
• Remuneration to be fixed by NABARD in consultation with GOI.
  
   

Eligibility:

• Minimum rank: Chief General Manager or equivalent.
  
   
• Must have a clean service record (no major penalties).
  
   
• Age limit: Not above 50 years at the time of application.
  
   
• Officer will be placed one level higher than existing rank for salary purposes.

AIRRBEA’s letter underscores that amalgamation alone is not reform. Without structural autonomy, professional leadership, and freedom from sponsor bank overreach, RRBs risk becoming larger but not stronger. The union’s appeal urges DFS to look beyond administrative reform and address governance at its core.