Indian banking sector to witness new round of consolidation: Acuite Ratings

The rating agency said this consolidation is eminent because many small sized private banks continue to face chronic asset quality problems which constrain their capital availability

The Indian banking sector is set to witness a fresh round of consolidation over the medium term – spread over FY22-24 period - primarily driven by large private sector banks, according to Acuite Ratings and Research.

The sector has already seen the first round of consolidation involving public sector banks over the 2017-20 period.

There is buoyancy in the equity markets which provides a significant opportunity for large Indian private banks to explore the inorganic growth route through acquisition of smaller private banks. Especially those private banks that continue to face headwinds or even public sector banks where the government is considering