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One State One RRB: Private Bank J&K Bank Named Sponsor of Jammu and Kashmir Grameen Bank Amid Concerns
J&K Bank’s role as sponsor to JKGB has raised concerns. The real test lies in how a private bank upholds public and social banking goals.
Author: Saurav Kumar
Published: April 10, 2025
As the Government of India’s officially released notification on the ‘One State One RRB’ policy, J&K Bank has been formally named the sponsor of Jammu and Kashmir Grameen Bank. The decision stands out as a notable exception, subtly raising questions about the appointment of a private sector bank to oversee a government-owned rural institution.
The Contentions Over Private Bank as RRB Sponsor
J&K Bank is currently the only private sector bank serving as a sponsor bank to an RRB in India. In contrast, the remaining nine sponsor banks—State Bank of India, Punjab National Bank, Bank of Baroda, Indian Bank, Canara Bank, Bank of India, Bank of Maharashtra, Indian Overseas Bank, and Union Bank of India—are all Public Sector Banks (PSBs).
This unique positioning of a private bank in a predominantly public ecosystem has sparked strong reactions from unions.
On November 5, 2024, the All India Regional Rural Bank Employees Association (AIRRBEA) submitted a letter to the Department of Financial Services (DFS) expressing concerns over the proposal to appoint J&K Bank as the sponsor of the newly amalgamated RRB entity in Jammu & Kashmir.
The letter stated:
“J&K Bank is a small private bank having no all-India exposure. The system, the work ethos and culture is different from other PSBs and is not commensurate with principles and objectives of RRBs who are dedicated to the cause of the rural people of the country.”
On the ground, similar sentiments were echoed by employees working within the RRB framework in Jammu and Kashmir.
An RRB employee in Jammu and Kashmir told Kanal, “J&K Bank has shown little emphasis on priority sector lending. It has penalised borrowers for not utilising their cash credit limits, raised interest rates on business loans, and even brought small borrowers under the One-Time Settlement (OTS) scheme through credit adjustments.”
He further remarked, “Appointing a private bank as the sponsor of Jammu and Kashmir Grameen Bank could undermine the very purpose of social banking.”
Concerns over J&K Bank’s approach were not limited to bankers and unions. Industry stakeholders have also raised red flags.
On a similar line of concern, the Federation of Chambers of Industries Kashmir (FCIK) also pointed to serious issues over J&K Bank’s persistent lag to meet its Priority Sector Lending (PSL). It also noted that its exorbitantly high interest rates charged to borrowers have been higher than those charged by banks across India.
While the Government of India has endorsed J&K Bank as JKGB’s sponsor under the ‘One State One RRB’ policy, concerns from bankers, unions and industry bodies raise valid questions about its alignment with the social goals of rural banking. The real test now lies in how well the sponsor upholds those objectives.