ICICI to acquire Bank of Rajasthan rural branches

Yet ICICI's ‘foreign-owned, Indian-controlled' tag could hamper change in sponsorship of MAGB.

ICICI Bank may be killing two birds with one stone through its proposed merger of the Bank of Rajasthan. Besides getting 468 branches, India's largest private sector bank will also get control of 58 branches of a regional rural bank sponsored by BoR.

The regional rural bank (RRB) sponsored by BoR is the Mewar Aanchalik Gramin Bank (MAGB). It was established in 1983 and has branches spread across three districts — Udaipur, Rajsamand and Pratapgarh in Rajasthan.

All other things being equal, ICICI Bank will be able to step into BoR's shoes as the new sponsor of MAGB.

However, ICICI Bank's ‘foreign-owned, Indian-controlled' tag could prove to be an impediment in effecting a change in sponsorship of MAGB. The bank could face legislative hurdles as RRBs have been established under the provision of an Ordinance promulgated on 26 September 1975, and the RRB Act, 1976.

Barring MAGB, J&K Gramin Bank (sponsor: J&K Bank Ltd) and Kshetriya Kisan Gramin Bank (sponsor: UP State Co-op Bank), all other RRBs have public sector banks/ associate banks of State Bank of India as their sponsor. There are 83 RRBs in India.

View the full story in The Hindu Business Line.