Four state-run lenders — Syndicate BankBSE 4.00 %, Canara BankBSE 2.01 %, Vijaya BankBSE 6.56 % and Dena BankBSE 8.67 % — have made presentations to the finance ministry on their consolidation plans. Government think tank Niti Aayog has also been asked to offer its suggestions on the amalgamation of public sector banks. A senior government official confirmed both developments.
The government wants fewer, stronger and bigger state-run banks. State Bank of India absorbed five of its associate lenders and the Bharatiya Mahila Bank in April, creating a larger bank that accounts for a quarter of all outstanding loans.
The four banks made their presentations separately last week to senior finance ministry officials on various aspects including existing loan portfolios, deposits, bad loans, human resource practices, non-core assets and the geographical spread of their branches.
Based on the presentations, the government is expected to point out merger possibilities to the banks and nudge them in that direction. It has said previously that there will be no shotgun weddings. The finance ministry is expected to seek similar presentations from other state-run banks as well. There are as many as 21 state-run banks in India, making for a large number of small banks that punch below their collective weight. China’s banks, for instance, dominate the top 10 list of global banks.
Finance minister Arun Jaitley had said on Monday, after reviewing the performance of state-run banks, that the government was "actively working" toward consolidation of public sector banks but declined to provide details, saying this was price-sensitive information. "Consolidation of banks was not on the agenda as far as this present meeting (on Monday) is concerned. But I can tell you, we are actively working in that direction," he had said.
The government official cited above said the presentations by the banks was a preliminary exercise and no plans have crystallised. "Some of these banks may be asked to close their subsidiaries as the government does not want conflicting subsidiaries if the lenders get merged," he said, adding that the finance ministry will also consider suggestions from the Niti Aayog.
source economic times
The government wants fewer, stronger and bigger state-run banks. State Bank of India absorbed five of its associate lenders and the Bharatiya Mahila Bank in April, creating a larger bank that accounts for a quarter of all outstanding loans.
The four banks made their presentations separately last week to senior finance ministry officials on various aspects including existing loan portfolios, deposits, bad loans, human resource practices, non-core assets and the geographical spread of their branches.
Based on the presentations, the government is expected to point out merger possibilities to the banks and nudge them in that direction. It has said previously that there will be no shotgun weddings. The finance ministry is expected to seek similar presentations from other state-run banks as well. There are as many as 21 state-run banks in India, making for a large number of small banks that punch below their collective weight. China’s banks, for instance, dominate the top 10 list of global banks.
Finance minister Arun Jaitley had said on Monday, after reviewing the performance of state-run banks, that the government was "actively working" toward consolidation of public sector banks but declined to provide details, saying this was price-sensitive information. "Consolidation of banks was not on the agenda as far as this present meeting (on Monday) is concerned. But I can tell you, we are actively working in that direction," he had said.
The government official cited above said the presentations by the banks was a preliminary exercise and no plans have crystallised. "Some of these banks may be asked to close their subsidiaries as the government does not want conflicting subsidiaries if the lenders get merged," he said, adding that the finance ministry will also consider suggestions from the Niti Aayog.
source economic times
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