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Regional Rural Bank mergers exempted from CCI Approval

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Regional Rural Bank mergers exempted from CCI Approval

The mergers of Regional Rural Banks are now exempted from the clearance of Competition Commission of India (CCI).

The mergers of Regional Rural Banks are now exempted from the clearance of Competition Commission of India (CCI).

What’s in News?
The government has decided to exempt mergers of Regional Rural Bank from the approval of Competition Commission of India (CCI), in signs that the next round of consolidation of such lenders may be in the offing. The exemption would be granted for five years and aimed at fast tracking such mergers.

This type of relief was also granted by the corporate affairs ministry in 2017. The latest move comes at a time when the government has stepped up focus on modernising the RRBs in a bid to spur credit growth in remote areas and boost economic areas. It has earlier favoured amalgamation of RRBs to enable them to minimize their expenses, shore up their capital base, optimize the use of technology and raise their exposure.

The number of RRBs fell to 43 in 2021-22 from 196 in 2004-05, following a series of amalgamations.

Regional Rural Banks are the financial institutions in India that designed to provide banking services in rural areas. They were established under the Regional Rural Banks Act of 1976.

These banks are regulated by the Reserve Bank of India (RBI). RRBs are jointly owned by the Central and the State Government and the sponsoring commercial bank in the specific ratio. The Central Government holds a 50% stake, the state government holds a 15% stake and the sponsoring commercial bank holds a 35% stake.

Competition Commission of India has been established by the Central Government on 14th October 2003. It consists of a chairperson and 6 other members appointed by the Central Government.

It is the duty of the CCI to eliminate practices having adverse on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade in the markets of India.

 

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