Banks Are Insulated From Mergers

The Indian banking sector would continue to be insulated from mergers and take overs even in the light of increasing competition amongst different market players, according to Reserve Bank of India deputy governor Jagdish Capoor.

With liberalisation, mergers and take overs would not be uncommon, but the Indian scene, which is dominated by public sector banks, has to be viewed differently with regard to mergers and take overs, said Capoor.

With increasing liberalisation in banking sector and banks accessing domestic and international capital markets to raise funds, bankers have been talking about a shake-out in the industry with public sector banks aligning with private ones and large banks amalgamating with small ones to form large banking groups.

Moreover, reacting to the Tarapore committee recommendations on capital account convertibility (CAC), bankers also felt that weaknesses of some small banks could be viewed as strengths by stronger banks and that would result in mergers.

He said the public sector banks had been performing well barring a few. Even most of the small banks have a good market share and are in the process of being strengthened, Jagdish Capoor said adding, the Indian banking scene has to be viewed differently. (PTI)