10 Public Sector Banks To Be Merged

Big banks will have enhanced credit capacity and global competitive edge, says Nirmala Sitharaman

In what comes as the second wave of the government’s efforts to revive the economy, Finance Minister Nirmala Sitharaman on Friday announced a slew of banking reform measures, including merger of 10 public sector banks into four entities. This would take the number of banks in the country from 27 in 2017 to 12, Ms. Sitharaman said.

These bank mergers, and the ones already carried out, will lead to the creation of big banks with an enhanced capacity to give credit, she said. These big banks, she said, would also be able to compete globally and increase their operational efficiency by reducing their cost of lending.

“We have chosen these banks for the mergers on the basis of ensuring that there is no disruption in the banking services, and that the banks should benefit from increased CASA [current account savings account] and greater reach,” Ms. Sitharaman said. “The banks that are being merged with each other run the same or very similar platforms, and so there will be no disruption in their activities.”