The government has decided to exempt mergers of regional rural banks (RRBs) stated by it from the requirement of the Competition Commission of India's (CCI's) clearance, a senior official said, in signs that the next phase of consolidation of such financiers may be in the offing. The exemption, aimed at fast-tracking such mergers, will be provided for five years, the statement said. Relevant sections of the Competition Act wouldn't apply to these transactions during this period, he added.
A similar relief was granted by the corporate affairs ministry in 2017 for a five-year period. The latest move comes at a time when the government has stepped up focus on modernizing the RRBs in a bid to spur credit growth in remote areas and boost economic activities.
It had earlier favored the amalgamation of RRBs to enable them to minimize their expenses, shore up the capital base, optimize the use of technology and raise their exposure. From 196 in FY05, RRBs came down to 43 as of FY22, thanks to a series of amalgamations.