The Government of India, through an order released on April 7, 2025, approved the merger of Rajasthan Marudhara Gramin Bank (RMGB) and Baroda Rajasthan Kshetriya Gramin Bank (BRKGB), effective from May 1, 2025, forming the new Rajasthan Gramin Bank under the “One State, One RRB” initiative. Sponsored by the State Bank of India, this strategic consolidation integrated over 1,593 branches across 41 districts, combining a business volume of nearly 1 trillion rupees. This study employs game theory to examine the strategic behavior surrounding the merger, emphasizing regulatory clarity, mutual trust, and the equilibrium outcomes among stakeholders. Drawing parallels from the successful 2017 SBI merger—which led to significant profitability and digital transformation—the Rajasthan Gramin Bank merger aims to replicate these benefits by unifying financial and technological resources. A key objective is to bridge the rural–urban divide and create an inclusive digital banking ecosystem using platforms like SBI’s YONO. Early developments point to strong digital integration and adaptive human resource strategies modeled after SBI’s post-merger reforms, enabling responsive, feedback-driven decision-making. Game-theoretic simulations suggest that cooperative approaches yield the Pareto-optimal outcomes, while risks such as asymmetric asset quality and weak signaling may trigger strategic defection or inefficiencies. This research underscores the vital role of strategic consolidation and game-theoretic frameworks in shaping resilient, inclusive, and efficient rural banking systems, offering valuable insights for policymakers and financial institutions aiming to enhance stability and economic outreach.