There is a need for amalgamation of banks into 5 or 6 banks, each looking after a geographical area. The rural branches and branches located in semi-urban centers with a population of less than 50,000 can be merged with the existing Regional Rural Banks or by floating new ones wherever necessary. Regional Rural Banks shall be the sole financial institutions in rural areas.

Banks in India till recently were a sort of kitchen gardens of select industrial groups or commercial communities. The banks were acting as milch cows for them in providing liquid funds to foster their industrial expansion or business enterprise. Hence, the spread and distribution of the branch network of the banks were confined to a select few towns and urban agglomerations furthering the commercial interests of their promoters. In short, banks were acting as pump houses that suck the savings from the public to fill the tanks of their promoters. They were providers of cheap source of funds to the establishments of their promoters. With the availability of cheap source of funds, the industrial groups were more often observed to function as hoarders of raw materials procured at throwaway prices during the periods of `good crop', thus building giant industrial units at the cost of the poor peasant and common man. Due to their ready access to cheap source of money, they used to create artificial scarcity of finished goods and thrive well at the cost of the industrial labor by declaring lockouts, by controlling their wage structure and by squeezing the common consumer. In this scenario, the banks never felt it necessary to provide banking facilities to other parts of the country or to other segments of the economy which did not directly serve their interest and which were relatively riskier like financing to Agriculture, Self-employment activities and exports to non-traditional overseas markets.

Restructuring Commercial Banks in India, There is a need for amalgamation of banks into 5 or 6 banks, geographical area, rural branches, semi-urban centers, existing Regional Rural Banks, floating new ones, sole financial institutions, rural areas, industrial groups, commercial communities, industrial expansion, business enterprise, finished goods, Agriculture, Self-employment activities