The government wants to reduce the number of state-owned banks to around 10 from the current 27, and it is ‘very serious’ on consolidation, said sources familiar with the development.
As part of the move, senior finance ministry officials are likely to meet heads of medium and small-sized public sector banks over the next two weeks to push for consolidation, a senior finance ministry official said Thursday.
The move comes close on the heels of a meeting between additional secretary (financial Services) G C Chaturvedi and heads of five leading public sector banks Wednesday to discuss consolidation in the sector.
“Large public sector banks are very keen to gobble up small ones to increase market share, expand reach in areas with a weak presence, and further strengthen balance sheet in the intensely competitive banking sector,” the official said.
On Wednesday, heads of Canara Bank, Punjab National Bank, Bank of India, Bank of Baroda, and Union Bank of India had met Chaturvedi. The official said that the
government will also meet unions of PSU banks to drive home the advantage of
consolidation and seek their views on mergers.
“The consolidation exercise is likely to kick off from Hyderabad and Bangalore regions as the process is likely to go through relatively smoothly in those regions. These areas also have ideal candidates for consolidation,” the official said. The official said that banks like Punjab & Sind Bank and Indian Bank are unlikely to figure in the first round of consolidation.
Earlier on Thursday, Canara Bank chairman and managing director A C Mahajan said his bank had “a deficient presence in Maharashtra, Haryana and Gujarat” and was looking at “inorganic growth” there.
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