North and South Bihar Gramin Banks to Merge into Bihar Gramin Bank from May 1, Becomes Largest Rural Bank in State

Patna: In a major structural reform under the Centre’s “One State, One Rural Bank” policy, the Uttar Bihar Gramin Bank and Dakshin Bihar Gramin Bank will merge into a single entity — Bihar Gramin Bank — with effect from May 1, 2025. The newly formed bank will become Bihar’s largest rural bank, operating 2,105 branches across 38 districts of the state.

The Finance Ministry has issued a gazette notification formalizing the merger. Punjab National Bank (PNB) will be the sponsor bank, and the head office of Bihar Gramin Bank will be located in Patna.

A Nationwide Restructuring of Rural Banks

The notification is part of a broader central government initiative to streamline rural banking by implementing the “One State-One Rural Bank” model. The consolidation covers 15 regional rural banks (RRBs) across 10 states and one union territory, including Uttar Pradesh, West Bengal, Odisha, Andhra Pradesh, Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, and Jammu & Kashmir.

According to the gazette, each newly constituted rural bank will have an authorized capital of ₹2,000 crore. The merger process was planned in consultation with NABARD, the respective state governments, and sponsor banks. The goal is to improve operational efficiency, viability, and rural outreach.

Fourth Phase of Rural Bank Mergers

This marks the fourth and final phase of rural bank consolidation. In 2005, India had 196 regional rural banks, including 22 in Bihar. After three rounds of mergers, only 43 RRBs remained across the country. The latest round will further reduce that number to 28, with only one RRB in Bihar.

Currently:

• North Bihar Gramin Bank, sponsored by Central Bank of India, has 1,027 branches across 18 districts.
• South Bihar Gramin Bank, backed by Punjab National Bank, operates 1,078 branches in 20 districts.

Their combined strength will now be integrated under the newly named Bihar Gramin Bank.

Banking Experts Welcome the Move

Commenting on the development, DN Trivedi, National Convenor of the United Forum of Rural Bank Unions, said:

“The operational expenses of rural banks are often on par with their sponsoring commercial banks, but their business is less than one-third. Merging them is the only viable solution to ensure a strong rural banking system.”

Similar Mergers in Other States

• Uttar Pradesh will see the merger of Baroda UP Bank, Aryavart Bank, and Prathama UP Gramin Bank into Uttar Pradesh Gramin Bank, with Bank of Baroda as sponsor and Lucknow as the head office.
• West Bengal’s three rural banks — Bangiya Gramin Vikas Bank, Paschim Banga Gramin Bank, and Uttar Banga Kshetriya Gramin Bank — will combine to form Bangla Gramin Bank, headquartered in Kolkata, with Punjab National Bank as sponsor.