Regional rural banks must be merged into one

Malappuram-based, Canara Bank-sponsored Kerala Gramin Bank is the country’s largest regional rural bank (RRB) in terms of business volume. With ₹17,800 crore of business and 535 branches, KGB is now set to launch Internet banking in September. It will be the first RRB to roll out Internet banking, Chairman, Shaji KV, told Business Line. Excerpts from an interview:
RRBs were set up in a different time period. But the Indian economy has since grown enormously and commercial banking has gone high-tech. Do RRBs still have relevance?

The relevance has, in fact, increased. More than half of the population still depends on agriculture for their livelihood and agricultural credit continues to be scarce. Thousands of villages are unbanked. Small low-interest loans to farmers and priority sectors make up about 80 per cent of the advances of most RRBs now. In many regions, gramin banks are the only option for villagers. The reasons for setting up a string of RRBs following the enactment of the RRB Act, 1976, are still valid. RRBs have regional character, better human interface, low cost of operations and offer low-interest loans.
But don’t they need to change with the times?
True. They need to adapt to the changing needs of the rural people and the economy. They need to be re-oriented and their operational base strengthened. Customer relations should be vastly improved. One advantage of RRBs over commercial banks is their local familiarity. RRBs should combine the professionalism of commercial banks with their local familiarity to provide better customer service. New banking technologies should be made available to RRBs, too. They should go in for ATMs and Internet banking. They should aim for gramin banking-plus.
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