The NITI Aayog is chalking out a road map on the proposed consolidation of public sector banks (PSBs) at the behest of the finance ministry, exploring various possibilities and models to create only a few banking behemoth of global size, a senior government official said on Tuesday.
The NITI Aayog is chalking out a road map on the proposed consolidation of public sector banks (PSBs) at the behest of the finance ministry, exploring various possibilities and models to create only a few banking behemoth of global size, a senior government official said on Tuesday. “A detailed report from NITI Aayog on consolidation is expected in about a month or so,” he said. The finance ministry is also roping in global consultancy firms to examine the issue. Finally, the ministry will take a call on the issue, as it deems fit, in consultation with the Reserve Bank of India, he added. Finance minister Arun Jaitley has already said that India needs five-six large PSBs of global size and that a large consolidation in the banking sector would be done at an appropriate time. Recently, the NITI Aayog had submitted a report on the possible disinvestment of Air India. The factors that would be looked into while the government undertakes consolidation exercise include financial burden (including stressed assets), human resource transition, regional balance and geographical reach, the official said. For instance, a lender like Bank of Baroda can take over some banks in the southern region that have turned around or are in the process of turning the corner such as Indian Overseas Bank. Similarly, Dena Bank could be merged with some large South Indian bank, according to sources. The merger process will pick up pace with the possible improvement in the stressed asset situation in the next two quarters, the official said.
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. Earlier this year, five associates and the Bharatiya Mahila Bank became part of State Bank of India from April 1. State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore were merged with SBI.