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Govt looks to create 3-4 SBI-sized banks as it mulls PSB consolidation

Number of PSBs may come down to 10-12 from the current 21, an official said

Press Trust of India  |  New Delhi 

Banks

The is working on a consolidation agenda with a view to creating 3-4 global-sized banks and reduce the number of state-owned lenders to about 12, an official said.

The 21 public sector banks would get consolidated to 10- 12 in the medium term, the official said.


As part of a three-tier structure, the official said, there would be at least 3-4 banks of the size of SBI, the country's largest lender.

Some region-centric banks like and Sind and will continue as independent entities while some mid-size lenders would also co-exist, the official added.

Last month, Minister said the is "actively working" towards consolidation of public sector banks but declined to provide details, saying this was a price-sensitive information.

Enthused by the success of merger, the ministry is considering clearing another such proposal by this fiscal if bad loan situation comes under control by then.

According to former RBI governor C Rangarajan, the system will have some large banks, some small banks, some local banks and so forth.

"What is needed in the system is variety," Rangarajan said.

One of the possibilities is that large public sector banks (PSBs) like National Bank, of Baroda, Canara and of India could try looking for potential candidates for acquisition, another official said, who did not wish to be identified.

Factors like regional balance, geographical reach, financial burden and smooth human resource transition have to be looked into while taking a decision, they said, adding a very weak should not be merged with a strong one "as it could pull the latter down".

In the last consolidation drive, five associate banks and Bharatiya Mahila (BMB) became part of on April 1, 2017, catapulting the country's largest lender to among the top 50 banks in the world.

State of Bikaner and Jaipur (SBBJ), State of Hyderabad (SBH), of Mysore (SBM), State of Patiala (SBP) and of Travancore (SBT), besides BMB, were merged with

With the merger, the total customer base of reached around 37 crore with a branch network of around 24,000 and nearly 59,000 ATMs across the country. The merged entity began operation with deposit base of more than Rs 26 lakh crore and advances level of Rs 18.50 lakh crore.

The in February had approved the of these five associate banks with Later in March, the cabinet approved of BMB as well.

first merged State of Saurashtra with itself in 2008. Two years later, State of Indore was merged with it.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Sun, July 16 2017. 12:45 IST
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