The Reserve Bank of India (RBI), as the regulator and supervisor of the banking system, would continue to play a supportive role in the task of banking consolidation based on commercial considerations, said V Leeladhar, deputy governor, RBI.
This would further strengthening the Indian financial sector and support growth while securing the stability of the system, he said while addressing the International Banking & Finance Conference 2008, organised by Indian Merchants Chamber in Mumbai.
Though consolidation in the public sector banking segment, which accounts for about 75% of the assets of the banking system, is still a work in progress, there are enabling legal provisions for the purpose in the respective statutes of the public sector banks.
The RBI has been supportive of the initiatives for consolidation and there have been no cases so far where the approval for merger of banks was denied by the RBI, since the proposals conformed to the requirements and guidelines of the RBI, explained Leeladhar.
According to him over the years, there has been considerable progress in consolidation in India in the private sector banks and the mergers have happened not only between the weak and the healthy banks but also, of late, between healthy and well-functioning banks as well.