EconomyMonday, 7 September 2026·The Hindu - Economy
Rangarajan on RRB consolidation and SFBs: key banking reform facts for TNPSC
C. Rangarajan said RRB consolidation has weakened local character and urged RBI to incentivise small finance banks, citing 196-to-82 and 43-to-28 reductions.
Key highlights
Direct fact
At an event in Chennai in 2026 marking the 10th anniversary of Equitas Small Finance Bank, former RBI Governor C. Rangarajan said the consolidation of Regional Rural Banks (RRBs) was “a step in the wrong direction” and urged the RBI to incentivise small finance banks.
Key specifics
- According to a July 2025 Lok Sabha reply by Nirmala Sitharaman, RRBs were consolidated from 196 to 82 between 2005 and 2010.
- Under the latest “One State-One RRB” phase, the number of RRBs fell from 43 to 28, effective May 1, 2025.
- Rangarajan said there were only 11 small finance banks, which he felt was insufficient for unmet credit needs.
- He linked credit delivery to bank nationalisation, priority-sector credit, RRBs, Local Area Banks, self-help groups and small finance banks.
- He said RRBs were created to preserve local and regional character in credit distribution.
Exam lens
TNPSC banking and governance question type: match the reform with the year, 196 to 82, 43 to 28, May 1 2025, and 11 SFBs. One-liner: RRB amalgamation and SFB policy are recurring MCQ themes in Indian banking reforms.