Merger by region may help consolidation of PSU banks

If done methodically, it could provide a natural hedge against asset quality issues in the long run

The CNX PSU Bank index has been among the major gainers of the current rally, rising 18 per cent since January. An improvement in financial conditions of state-run banks has been recognised as a major factor for growth, among a host of other things.

Some of the major players, including the Punjab National Bank (PNB) and Bank of Baroda (BOB), along with smaller ones like Canara Bank and Syndicate Bank turned profitable in the fourth quarter, which ended March 31, after posting steep losses in the same quarter in the year-ago period.

Behemoth State Bank of India (SBI) and its