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RRBs Vs Sponsor Banks: Unravelling the Conflict
According to Venkateshwar Reddy, All India Regional Rural Bank Employees Association (AIRRBEA) Secretary General, there has been a trend of sponsor banks deputing their own officers to the RRBs in different posts, intending to divert business to sponsor banks via cross-selling.

Author: Saurav Kumar
Published: July 16, 2024
Amid the ongoing debate on the merger of the Regional Rural Banks (RRBs) into sponsor banks, the friction among the crucial entities of India’s banking sector has come to the fore. Major unions in commercial banks (also known as sponsor banks) such as the All India Bank Officers Confederation (AIBOC) and the All India Bank Employees Association (AIBEA) have vouched for merging the RRBs into their respective sponsor banks.
Several critical arguments back this demand, including seamless technology upgrades, uniform delivery of modern banking products, and reduced dependence on budgetary support from the government. However, major unions in RRBs stand in conflict on several fronts significant to their existence.
The Delay in 12th BPS Benefits
The disparity in extending 12th Bipartite Settlement (BPS) benefits became a point of contention between the sponsor banks and the RRBs. The sponsor banks received the Department of Financial Services' nod to implement the 12th BPS benefits in March 2024, but RRBs had to wait for the same approval, with the model code of conduct of general elections cited as the reason.
RRBs received the 12th BPS approval in July 2024. The delay in 12th BPS benefits significantly derailed the morale of RRBians. A banker from Utkal Grameen Bank told Kanal, “After working hard to serve the rural people, we too deserve our benefits on time. The delay affects our motivation and professional efficiency.”
Massive Unfilled Vacancies
RRBs have been grappling with a shortage of staff, and the workforce has been promptly expecting the sponsor banks to fill the vacancies. However, this has not happened. For example, employees in Bank of Baroda-sponsored RRBs, namely Baroda UP Bank, Baroda Rajasthan Kshetriya Gramin Bank (BRKGB), and Baroda Gujarat Gramin Bank (BGGB), expressed their discontent over the vacant posts.
According to a banker from BRKGB, the staff shortage has adversely affected the lives of bankers, ceasing work-life balance. The sponsor bank has been sitting quietly on the request without any action.
India’s largest Gramin bank, Baroda UP Bank (BUPB), witnessed a 16% decline in staff and a 39% increase in business. The unions pointed to the blatant violation of the S.K. Mitra Committee guidelines, which were established to streamline promotions and recruitment processes.
High-Handedness of Sponsor Bank Officers
Employees of RRBs and the Chairman of a few RRBs have been at loggerheads due to unprofessional behaviour.
An Utkal Grameen Bank official lamented the rude approach of higher officials like the Chairman and General Manager, stating, “The Chairman and General Manager are from the sponsor bank, and they create pressure to sell Third Party Products such as SBI Mutual Funds and SBI Life Insurance. At their mercy of upgrading, we are struggling with outdated software.”
Gramin bankers further argued that their influence has led to an abusive environment in the bank, where bankers are threatened to sell insurance or resign. Two months ago, a whistleblower exposed the unethical practice and abusive behaviour of a Regional Manager in Baroda UP Bank. The RM was from the sponsor bank, i.e., Bank of Baroda.
According to Venkateshwar Reddy, All India Regional Rural Bank Employees Association (AIRRBEA) Secretary General, there has been a trend of sponsor banks deputing their own officers to the RRBs in different posts, intending to divert business to sponsor banks via cross -selling.
He said, “This tendency is demotivating to RRB officers in general, as it prevents their deserved promotions and other benefits. This deputation system is also an added financial burden on RRBs. Thirdly and most importantly, the deputed officers are serving the interests of their parent banks over the interests of RRBs. They prioritise diverting business to their parent banks or cross-selling their products. All these are against the foundational goal of the RRBs.”
However, sponsor bank officials contend that RRBs should not exist as separate entities. A bank official from SBI said, “The merger of gramin banks and sponsor banks would result in overall enhancement of their functioning by strengthening infrastructure, technology, and workforce expansion.”
Despite RRBs grappling with unresolved challenges, its workforce, which approximately serves 40 crore people in India, awaits justice in the form of recognition.