Branch rationalisation to HR challenge: Brokerage view on PSB consolidation

The government announced mergers of leading public sector banks (PSBs) in post market hours on Friday. While most analysts term it as a step in the right direction, they do caution that the gains will accrue only over the long term. 

Unlike private banks, most PSBs, analysts say, do not have clear specialisations and end up competing against each other. With stretched credit-deposit (CD) ratios of most major private banks, acceleration of credit growth depends primarily on PSBs. The consolidation / merger, analysts expect, will increase for PSBs.