Enthused by the success of merger, the Finance Ministry is considering clearing another such proposal in the public sector banking space by this fiscal end with a goal to create 4-5 global sized lenders.
Five associate banks and Bharatiya Mahila Bank (BMB) became part of SBI on April 1, 2017, catapulting the country’s largest lender to among the top 50 banks in the world.
Now, the Finance Ministry is looking to replicate the model in the case of other state-run banks so that they reach critical mass to compete with global peers.
“Consolidation is a must…But decision in this regard would be based on commercially prudent parameters. If the NPA situation gets better, there could be one more merger towards the end of this fiscal,” a senior official told PTI.
Toxic loans of public sector banks rose by over Rs 1 lakh crore to Rs 6.06 lakh crore during April-December of 2016-17, the bulk of which came from power, steel, road infrastructure and textile sectors.
Finance Minister Arun Jaitley has on several occasions said India needs 5-6 banks of global size and scale and further consolidation in the banking sector will be done at the appropriate time.