Three years ago in 2019, 10 public sector banks were announced to be merged to create four large sized nationalised lenders, bringing down the total number of public sector lenders to 12.
Now, as per a financial ministry official requesting anonymity, the Centre is considering to begin a second round of public bank mergers to bring the number of large-sized public sector lenders like the biggest bank in India, State Bank of India, further from 12 to 4 or 5.
Trak.in has covered multiple stories on the significance of bank mergers from the Centre’s point of view.
Many financial experts, including Arun Jaitley had repeatedly mentioned a surplus of large banks in India, pressing that it was in a dire need of reducing the total number to up to 6 banks, by amalgamating smaller lenders into larger ones.
Finance Ministry Official Hints About a 2nd Round of Bank Mergers
As per an unnamed ministry source, the Government plans to begin the second round of bank mergers, with an aim to be left with only 4-5 large banks from a total of 12 banks at present.
This would be done after examining a comprehensive study that has been commissioned on the outcome of amalgamation in state-run banks, stated the source.
The breakdown of 12 public banks include seven large and five smaller ones.
“Concerned banks have been asked to submit their feedback by month end. We will be holding wider consultations through Indian Banks’ Association (IBA) and with other stakeholders before firming up the future strategy,” the source added.
As per a Times article quoting the official, public lenders have done better on all major indicators in the last few years and in FY22 doubled their profits. ‘While the Centre would like to maintain its presence in this sector, it would like to bring down the number to around 4-5 from existing 12 banks,’ the source added.
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