India to set up panel to look at consolidation for state-run banks

NEW DELHI (Reuters) - India will form a panel to devise a strategy for consolidation in the state-run banking sector, Finance Minister Arun Jaitley said on Saturday.

More than two dozen state-run banks dominate India's banking sector with over two-thirds of assets. They also hold close to 85 percent of the bad loans in the sector.

Banks have favoured the idea of consolidation, Jaitley told reporters after a two-day annual brainstorming event of senior officials from banks, the central bank and finance ministry.

He also said the government was considering an employee stock option plan for the state-run banks.

(Reporting by Devidutta Tripathy. Editing by Jane Merriman)