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  1. Narendra Modi government to create mega PSU bank? Number of PSBs face axe

Narendra Modi government to create mega PSU bank? Number of PSBs face axe

The PM Narendra Modi government is working on a consolidation agenda with a view to creating 3-4 global-sized banks and reduce the number of state-owned lenders to about 12, an official said.

By: | New Delhi | Updated: July 16, 2017 1:24 PM
narendra modi, pm narendra modi, narendra modi PSU, PSU banks, PSB, mega psu bank PM Narendra Modi (Reuters)

The PM Narendra Modi government is working on a consolidation agenda with a view to creating 3-4 global-sized banks and reduce the number of state-owned lenders to about 12, an official said. The 21 public sector banks would get consolidated to 10- 12 in the medium term, the official said.  As part of a three-tier structure, the official said, there would be at least 3-4 banks of the size of SBI, the country’s largest lender.

Some region-centric banks like Punjab and Sind Bank and Andhra Bank will continue as independent entities while some mid-size lenders would also co-exist, the official added.  Last month, Finance Minister Arun Jaitley said the government is “actively working” towards consolidation of public sector banks but declined to provide details, saying this was a price-sensitive information.

Enthused by the success of SBI merger, the finance ministry is considering clearing another such proposal by this fiscal if bad loan situation comes under control by then.

According to former RBI governor C Rangarajan, the system will have some large banks, some small banks, some local banks and so forth.

“What is needed in the system is variety,” Rangarajan said.  One of the possibilities is that large public sector banks (PSBs) like Punjab National Bank, Bank of Baroda, Canara Bank and Bank of India could try looking for potential candidates for acquisition, another official said, who did not wish to be identified.

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Factors like regional balance, geographical reach, financial burden and smooth human resource transition have to be looked into while taking a merger decision, they said, adding a very weak bank should not be merged with a strong one “as it could pull the latter down”.

In the last consolidation drive, 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.

State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP) and State Bank of Travancore (SBT), besides BMB, were merged with SBI.

With the merger, the total customer base of SBI reached around 37 crore with a branch network of around 24,000 and nearly 59,000 ATMs across the country. The merged entity began operation with deposit base of more than Rs 26 lakh crore and advances level of Rs 18.50 lakh crore.

The government in February had approved the merger of these five associate banks with SBI. Later in March, the cabinet approved merger of BMB as well.

SBI first merged State Bank of Saurashtra with itself in 2008. Two years later, State Bank of Indore was merged with it.

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  1. Bhaskar Losari
    Jul 18, 2017 at 7:04 pm
    Don't think that all is well with SBI(before after merger).It is only WHITE ELEPHANT.merger of Banks make it easy to privatisation.It is prelude to privatisation.
    1. Tarun ''btarunr''
      Jul 18, 2017 at 12:17 pm
      Consolidation is always a precursor to privatization.
      1. Ram Deshpande
        Jul 17, 2017 at 8:31 am
        Yes this is the good step from central govt. It will solve the problems faced by banks at present.Three or four banks in nation are more than enough.The FM and its team is planning in right direction.The three or four banks can be easily controlled.Policies of those banks needs reorientation. This is also a step to curb corruption.People of the nation are of opinion that all District co operative banks shall closed in time frame. They are big source of corruption by the political leaders and officers under them.The loot of public money can be stopped. Working of those bank after demometisation was seen by the govt and the people of the nation.Good governance by sir Narendra Modijis team. Sir we salute you for all the recent policies.Thanks.Jai Hind Jai Kisan. Ram Deshpande Narayanguda Hyderabad.
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          PN Bareja
          Jul 16, 2017 at 9:27 pm
          The idea of four large banks besides SBI with names like North India, South India, West India and East India Bank is a better one. Otherwise the employees of merged en y are treated as second citizens by the employees of the bank with which it is merged. Merger of NBI with PNB created this rift amongst employees of both the banks for years together. These four mega banks would also have pan India presence and level playing field with SBI and other peer private banks.
          1. G
            Gurjeet Singh
            Jul 16, 2017 at 9:05 pm
            This is a part of country's corporate financial "window dressing" for showing the world "large" banks. The biggest sufferers will be the Indian public. Banking from door steps will be shifted to " long steps". Many branches will be closed and obviously banks would , practically,shortage of staff fact, the present staff's work load will multiply manifolds. There will be long long queues in banks, rather there are as can be seen in SBI. Greater number of single windows, increase in staff strength for faster service, and avoiding merger of the closely located branches should be taken care of.
            1. Bala Chander
              Jul 16, 2017 at 1:39 pm
              what will be private bank and small bank status?
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