On September 17, the Narendra Modi government announced the merger proposal of Bank of Baroda, Vijaya Bank and Dena Bank with an aim to make the entity the third largest bank in India.
Amid the on-going merger of first of three public sector banks, State Bank of India (SBI) Rajnish Kumar has said that India has too many PSBs and that the merger process was inevitable. In an interview with ET Now, SBI chief said that 21 PSBs are too many and they needed to be reduced in number echoing the popular opinion.
Rajnish Kumar was asked if the idea of merging two strong banks — Bank of Baroda (BoB) and Vijaya Bank — with one weak Dena Bank a good idea, to which, he replied that it was a recommendation made in 1992. “It’s been 26 years. The merger had to start someday,” Rajnish Kumar told the news channel.
On September 17, the Narendra Modi government announced the merger proposal of the three banks with an aim to make the entity the third largest bank in India. Boards of all three banks have approved the merger plan.
Meanwhile, in a separate interview with CNBC-TV18, Rajnish Kumar tried to calm the fears arising due to the crisis in the Non-Banking Financing Companies (NBFCs), saying that it is nothing like the one in 2002.
He said that SBI will continue to pick-up good portfolios from NBFCs that meet their underwriting criteria. SBI recently increased its asset purchase target from NBFCs from Rs 15,000 crore to Rs 45,000, which experts dubbed as a bailout. However, Rajnish Kumar dubbed it as a ‘win-win’ situation for both SBI and NBFCs, as the former will get a good commercial opportunity while the latter will get to offload some short-term papers.