One State One RRB: J&K Bank as Sponsor Amid Amalgamation Sparks Employees Outcry in J&K

In a strong response to the government’s recent notification under the One State One RRB policy, employees of Ellaquai Dehati Bank (EDB) have voiced firm opposition to the decision to designate J&K Bank as the sponsor for the newly amalgamated entity J&K Grameen Bank.

The protest stems from concerns about entrusting a private sector bank with the sponsorship of a government-owned rural bank, a move that employees describe as “regressive” and misaligned with the foundational goals of Regional Rural Banks (RRBs).

As previously reported by Kanal, J&K Bank remains the only private bank chosen as a sponsor for an RRB in India, breaking from the long-standing precedent where all 28 RRBs are sponsored by public sector banks such as SBI, PNB, and Bank of Baroda. 

Key Concerns Raised by EDB Employees

The employees’ letter outlines a series of critical objections to J&K Bank’s appointment, citing governance, infrastructure, and compliance concerns:

• Deviation from National Norms:
  All other RRBs are sponsored by public sector banks. Allowing a private bank sets a controversial precedent. 
• Limited Rural Infrastructure:
  J&K Bank lacks widespread rural penetration compared to established public sector banks like SBI. 
• Weak HR and Promotional Support:
  Employees fear lack of structured career growth and transparency under private bank sponsorship. 
• Profit-Oriented Model Misaligned with RRB Mandate:
  J&K Bank’s profit-driven model may conflict with the developmental and inclusive ethos of RRBs. 
• Regulatory Concerns:
  The bank has faced serious issues including GST violations, SEBI scrutiny, and RBI penalties for PSL shortfall. 
• Operational Risks and Fraud History:
  Employees cite data on reported frauds, questioning the bank’s internal control and ethical culture. 
• Preference for SBI:
  The letter highlights that SBI has a proven track record of rural support and was EDB’s sponsor prior to the merger decision. 
• Impact on Public Trust:
  The decision, employees argue, could dent public confidence in the new RRB's operations and neutrality. 
• Questionable Selection Process:
  Employees claim there was no consultation or transparency in selecting J&K Bank, unlike other mergers guided by clear policy rationale. 
• Staff Morale and Retention:
  The uncertainty around sponsorship and future HR policy has already begun affecting staff morale.

In line with these concerns, a section of employees told Kanal, “Appointing J&K Bank—a private entity—as the sponsor undermines the role of public sector institutions like the State Bank of India. Moreover, J&K Bank’s profit-oriented operational model may conflict with the social development-centric mandate of Regional Rural Banks, especially in rural and underdeveloped areas.” 

Many believe that AIRRBEA should actively oppose the selection of J&K Bank over the State Bank of India, given the latter’s proven public sector credentials. Notably, the decision—first announced by the Department of Financial Services (DFS) in November 2024—had already drawn objections from AIRRBEA, which cited serious reservations about J&K Bank’s private ownership structure.

Contradicting Concerns

While objections have been raised against J&K Bank's appointment as sponsor for the newly amalgamated J&K Grameen Bank, a contrasting viewpoint has surfaced from within Ellaquai Dehati Bank (EDB) itself. Speaking to Kanal, an EDB official stated, “The majority of EDB employees reject the claims made by a small group of dissenters, particularly those from outside the Union Territory. Most staff members have welcomed the merger and are optimistic about the growth opportunities and challenges that come with being part of a larger entity backed by J&K’s leading banking institution. The expanded service area will now enable deeper rural penetration, something both EDB and JKGB previously lacked.”

The official further noted that leading umbrella associations representing Regional Rural Banks (RRBs) across India have already extended their support to the amalgamation, framing it as a step in line with the Government of India’s development vision for Jammu and Kashmir.

Call for Reconsideration

EDB employees’ concerns underscore a broader demand for greater scrutiny and transparency in selecting sponsor banks under the One State One RRB policy.